CRE Slow In Adopting AI, But The Tech Revolution Is Coming
Imagine you are a broker walking into a negotiating session and, with the press of a few buttons on your mobile device, you could pull up all of the data of a particular property that your client is interested in acquiring.
You can pull up the location, demographics, the labor pool, the cost of labor in the area, tenant information, leases, historical trends of the area dating back 100 years, information about the owners and everything you ever wanted to know about the asset type.
It used to take teams of people several months or even years to collect this information from a variety of sources, but artificial intelligence would allow the same kind of research and data to be easily gathered in days or weeks.
While some real estate companies are using artificial intelligence in some capacity, the industry still lags far behind when it comes to adopting the innovative technology, McGrath said.
But make no mistake, artificial intelligence is coming to disrupt commercial real estate, he said.
“This is a hypercompetitive space and I think all companies are always looking for an edge and an information advantage,” McGrath told Bisnow after the CRE Tech conference March 27-28 in Los Angeles.
McGrath moderated a panel about artificial intelligence in commercial real estate.
Artificial intelligence relies on technology with the ability to gather and collect data, learn from it and problem-solve.
AI is already being used in certain asset classes to reduce costs, increase efficiency and gather data.
Retail companies are using AI to reduce shipping costs, improve supply chain efficiency and personalize shopping experiences.
Others like Leverton are using it to read PDFs and enter data into an accounting system. Leverton is a company that specializes in extracting information and compiling the data. The company partnered with Savills last year.
Skyline AI co-founder and CEO Guy Zipori said his company uses AI to make smarter investment deals. Skyline AI monitors multifamily assets in the U.S. that have more than 50 units.
The company examines about 400,000 different properties and each property has about 10,000 different data points, going back up to 50 years depending on the data and the property, Zipori said.
“We incorporate it to make better investment decisions, finding anomalies in the market and investment opportunities that others can’t find,” Zipori said.
McGrath said commercial real estate companies are still hesitant about adopting the new technology because some people misunderstand it.
“I think a lot of the general population hears AI and have a tendency to anthropomorphize artificial intelligence and think of futuristic robots giving you recommendations and Big Brother-type of initiatives,” McGrath said.
“While those are components of AI, humans are still required to teach the AI,” he said. “You can’t get to that stage until [you feed it] voluminous amounts of data and a lot of teaching.”
Most companies are outsourcing it to smaller startups because they don't have the bandwidth and the talent, he said.
McGrath said data structuring, or organizing and storing data, and collecting all types of property data is going to be the key for commercial real estate to move forward and advance in technology.
One day in the future an AI computer system could even make an acquisition recommendation similar to what YouTube and Netflix do based on a person's search history.
McGrath said that concept is a far reach, but it could happen.
"I'm super-excited about the prospect about having a high-powered and highly intelligent data set to drive us forward with making better decisions," McGrath said. "It's a great vision for the industry."