To print this article, all you need to do is be registered or log in to Mondaq.com.
Artificial intelligence (AI) is bringing significant changes to a wide variety of industries and commercial real estate (CRE) is no exception to the use of this technology. From marketing to property management, AI could speed up processes and reduce costs in a variety of ways. But what exactly is AI? Here’s a quick lesson.
AI 101
The term “AI” generally refers to the use of computers to perform complex tasks – such as image perception, speech recognition, decision making and problem solving – generally considered to require human intelligence. . Several types of technologies fall under AI, including:
- Machine learning. Machine learning is an iterative process in which machines improve their performance in a specific task over time with little or no programming or human intervention. For example, machine learning can predict when a home will close based on factors such as the season and market cycles.
- Automatic Natural Language Processing (TAL). This uses algorithms to analyze unstructured human language in documents, emails, texts or conversations. Loan officers can use it to locate specific information in a document based on the words surrounding that information.
- Robotic Process Automation (RPA). RPA automates time-consuming and repetitive manual tasks that do not require decision-making based on business rules and structured inputs. For example, it could streamline property searches.
As you can see, it’s easy to see why AI is poised to revolutionize all kinds of business processes.
AI in the CRE world
Many functions at the heart of CRE can benefit from AI, including:
Marketing
Landlords, rental agents and brokers can use AI to aggregate data from the internet to develop insights into markets, competitors and potential buyers and sellers. Machine learning can help identify optimal media paths to reach target audiences. It can also produce better prices by predicting demand based on factors such as location and property features. Chatbots – SMS or AI hearing programs – can more cost-effectively handle routine inquiries from potential buyers or tenants, build profiles and schedule appointments.
Related Reading: Using Data Analytics to Gain a Competitive Edge and Increase Tenant Satisfaction
Transaction Matching
AI could improve trade matching in several ways. Early on, RPA can collect and process data to eliminate mismatches before much time or money is wasted. Machine learning can assess risk and make financial projections for properties, steering potential investors away from properties that don’t meet their investment criteria. It can also analyze past transactions to make predictions about the likelihood of a sale between specific parties. NLP can quickly scan documents and identify potential red flags, eliminating the need for extensive manual due diligence.
Property management
AI promises to generate significant savings in property management, especially in the area of energy costs. The spread of the so-called “Internet of Things” – i.e. the networking of people, sensors and objects to automatically collect, exchange and apply data – is already opening up the way.
Data sensors in building systems enable real-time adjustments to temperature, lighting, and similar controls. This data can also lead to predictive analytics that inform decisions about system maintenance and replacement, while robots can check and possibly repair structural damage.
Chatbots can also play a role in property management. For example, they facilitate quick communication with tenants and even offer concierge-type services. This can increase tenant satisfaction and attract new tenants.
Of course, with these potential benefits come additional costs. Property owners may need to invest in enhanced cybersecurity to protect data and access to automation systems. Older buildings may also require an infrastructure update to take advantage of new technologies.
The future is now
Artificial intelligence is no longer just a crazy idea in the minds of sci-fi fans. It is reshaping many industries and is about to do the same for CRE. Owners, developers, managers and investors will need to keep abreast of developments to compete.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
POPULAR ARTICLES ON: U.S. Real Estate and Construction
