Introduction
Times have changed in commercial real estate. Change is inevitable even in something as “solid” as CRE. The worlds most well known firms knew innovation was the key to lasting success. First beginning with the age of the internet, savvy firms knew that if you wanted to compete you needed to enter the digital world. Next, it was the rise of social media and digital advertising (and still is) only a few short years later we are entering a new cycle of technological innovation. Artificial intelligence or AI for short.
AI has now forced us into the new era of commercial real estate. Technological adoption is something that many firms struggle with.
AI is a function of marketing, business ops, and client retention only if you understand how to use it properly. But if you are like most CRE professionals then you are likely wondering two things either what or how it can be. Having this understanding can allow you to reach your full potential online.
You could also be fearful of if AI will harm your success now and long term. We are here to say no. It will not ruin real estate rather enhance it. In this article by the Cindtoro team we are going to show you some of the most useful ways AI can be used in the commercial real estate industry.
Who this article made for
We created this article to help all members of the commercial real estate industry understand both the impact and importance of artificial intelligence in CRE.
AI Hype vs. Reality in CRE
It is important to set expectations for what AI can and cannot do. There are limitations to its use in commercial real estate. It is not a magical solution to every problem. It will not do all of your work for you. It can do certain things really well and other things horribly.
It does not do anything until you tell it to do something (at this point of time) The system is only as smart as the prompts you ask. If your prompts are lazily written you should expect to get little to no value from the output. However, if you ask intelligent, intentional questions with a clear goal in mind you will generate a much better result.
Areas Where AI Performs Well
For commercial real estate there are a few key areas that large language models perform really well. Some of the best use cases are some of the following things:
- Summarizing
- Pattern recognition
- Drafting
- Prospecting
We will review each of these things in greater detail below.
Summarizing
CRE professionals have to review numerous documents throughout the day including but not limited to items such as: purchase agreements, deeds, rent rolls, operating statements, tax bills, and inspection reports just to name a few.
Now with the help of AI this process can be handled much faster enhancing efficiency via summarizing any key points contained in each document. It is also works great to summarize items such as emails or phone conversations.
Pattern recognition
People only have so much time in the day to look at spreadsheets, charts, documents, etc etc. You could be sitting on a treasure trove of data and never know it. Your firm could also be already reviewing these documents mining for information.
The issue is small but important details can go unnoticed even by the best teams. This is where AI can come in handy carefully reviewing large (or small) sets of data looking for unrealized patterns missed by people.
Drafting
Drafting documents the old fashioned way used to take a long time. However now It is easier than ever to produce drafts of lease agreements or other legal documents with the help of AI you can now quickly create nearly any drafting document your firm needs. We recommend your firm carefully reviews any document for accuracy and if the documents are for legal matters reviewed by attorney.
Prospecting
AI can also be useful for the time consuming process of prospecting. Mainly from the standpoint of a research perspective, these tools can be used to research and prepare for meetings, helping to condense what would normally be an hours-long process spent reviewing zoning, sales data and important other information in a matter of minutes.
What AI Cannot Replace
AI is not a magic bullet, it has strengths and weaknesses and in commercial real estate there are many things are safe from a takeover. Things such as:
- Local Nuance
- Relationship-building
- Negotiations
- Promotion
Let’s review some of these things below in more detail.
Local Nuance
AI will never understand the local nuances of an individual market landscape better than a professional with years of experience and insight into the inner workings of a community. Only someone who has been on the ground will understand what life is like in a certain area. This cannot be replicated by a machine.
Relationship-building
Commercial real estate is a relationship focused business. Nothing gets done in this industry without the foundation of solid relationships. Human connection is something that we all search for. People know how to spot anything that is non-human it is essential to our survival.
Think about the last time you had an interaction with an automated messaging system it is frustrating especially when you want to speak to a real person. There is noway relationship building will be replaced by AI ever.
Negotiations
If you reach the negotiation phase chances are you have taken steps to build a solid relationship with your prospect. Artificial intelligence cannot help you negotiate your deals for you. That is a process that must be undertaken by you and your firm.
Effective Property Promotion
To sell or lease commercial property you need to promote it. Effective promotion comes down to knowing how to influence the right people at the right time on the right platforms. The Cindtoro team has tested using it for marketing and found campaigns created with artificial intelligence lack overall clarity and depth.
It is not possible for AI to create meaningful campaigns because of the way their models are trained, often using basic information from all over the internet. It does not work because it lacks real world experience of what actually works and what does not.
Our Recommendations
Data Analysis
In our experience AI is a great option for pattern detection and data analysis work. It can save a ton of time reviewing data that could be overlooked.
Far too many people use AI to think for them when they should be using it to uncover any hidden areas they may be overlooking. This is where the real value lies. To get the best results ask intentional thoughtful prompts with a specific end goal in mind.
Summarizing
It may not be for everyone but using artificial intelligence to summarize content is a major time saver. Doing so will allow you to gain back any lost time spent reading CRE documents or taking notes on important conversations.
Conclusion
Innovation is what keeps business moving forward. Do not fall behind by not implementing AI into you CRE. If you need help the Cindtoro team is here to assist. Contact us for more information.