Robots Take Over Real Estate, But Not How You Expect: How AI And Automation May Impact CRE
Typically, the tedious task of researching and writing a credit memo for a loan can take days. Jeff Saul promises he can do the burdensome task in 10% of the time, cutting more than 50 hours of tedious, manual data entry from someone’s job. Saul himself isn’t a savant; Nativ, a new commercial real estate software platform he co-founded that utilizes artificial intelligence and automation, reportedly can reduce that workload to just a few hours. For Saul, that’s just the beginning. He believes Nativ can cut much more.
“We’ve studied the labor components of junior-to-midlevel CRE professionals, and have concluded that more than 85% of time expenditure is on highly automatable tasks,” he said. “Our goal is the automation of all non-subjective components of this workflow. Eventually we hope to take on the subjective parts as well, although we believe the industry isn’t quite ready for that today.”
Nativ, a recent entrant into the increasingly crowded proptech field, is part of a wave of technology that, having grown over the past few years, is set to crest when the CRE world begins to ramp up post-pandemic. Automation and AI in the workplace, already a fast-growing field, is expected to boom further as employers see cost savings and efficiency gains.
The robots aren’t just mastering clerical, low-skilled work. Companies offering “robotic process automation” are moving up the corporate ladder, augmenting and increasingly replacing work done by professionals including doctors and lawyers, according to The New York Times, and a Brooking Institution study from 2018 found that white-collar jobs are the most susceptible to being done by AI.
For CRE, an industry famous for its slow adoption of technology — and with a not-insignificant amount of data analysis and paperwork — automation and AI have been discussed for years. But it has become much more relevant this year, both as technology continues to improve and a year of remote work and slimmed-down headcounts have led many CRE execs to think about ways to be more competitive and efficient.
Peter Miscovich, a managing director at JLL focused on strategy and innovation, says that AI will impact the industry, but at a much slower pace than insurance or financial services, because CRE is still catching up in terms of digitization. But it is “teed up for disruption,” and there will be much more digital talent entering the industry.
“In CRE, there will probably be more digital augmentation, human plus machine, than actual human replacement,” he said.
CEL & Associates CEO Christopher Lee, whose company produces regular industry salary and compensation analysis, told Bisnow that “companies are increasingly shifting a number of their functions to automation, offshoring, AI and independent contractors. Anywhere from 70% to 80% of CEOs in other industries are looking at automation, freelancers or streamlining systems as a basis for fulfilling work requirements.”
He predicted 35% of the workforce will not come back to the office full time, and automation may play a big role.
Whether or not Lee’s predictions come to pass, it’s true technological adaptation is accelerating throughout the real estate world. Maureen Waters, a partner at MetaProp, said that what she calls "Covid-tech" — the tools, sensors and technology needed to facilitate a post-pandemic return to the office — as well as the overall leap forward in digital tech seen during Covid, such as smart property management sensors and digitized applications and paperwork, has been the greatest adoption of technology in the industry she’s seen in the last 25 years.
“We combined five or six years of change in a single year,” she said. “I’d venture to say maybe even more.”
More firms are embracing advanced technology as well as more data-informed approaches to analysis and strategy. JLL’s Miscovich said that firms that master AI and automation processes around occupancy planning and building management, among other fields, will have a competitive advantage. A coming “tsunami of data” will reshape how many parts of CRE operate.
“In the world we’re headed into, there’s a much broader need for data scientists, engineers and insights around the consolidation of data,” Waters said.
But will this drive to speed up everyday tasks and apply big data to deal analysis mean fewer jobs in the industry? Nativ’s Saul believes the ongoing technological shift isn’t a zero-sum game. Automating 85% of tasks doesn’t mean 85% job loss; rather, it means the junior executives in question, whose workflow may be partially automated, may simply be able to execute more deals more efficiently and engage in more proactive business improvements.
”Look at a company like Amazon,” he said. “Automation of their distribution networks hasn’t resulted in fewer employees. It’s actually led to more hires, and as a result, has dramatically improved the efficiency of its business, facilitating growth and expansion. We anticipate a similar dynamic unfolding in CRE.”
The types of jobs impacted by increased adaptation of AI and automation will vary, as will the impacts. Tyler Kastelberg is the founder of Bullpen, an online marketplace for freelancers in real estate that uses some algorithms to match professionals to jobs. He’s looked extensively at AI and automation, and came away with the impression automation won’t wipe out jobs the ways naysayers may think. He thinks the real changes in employment, if there are any, will come from back-office staff assigned to tasks like check handling or payment processing. “Automation will wipe that out,” he said.
He believes increased efficiency will end up helping the labor market. The combination of technology and flexible job structures like freelancing or offshoring means there will be less hiring and firing during peaks and troughs in the business cycle. Automation and new work arrangements may mean that more small businesses, or two-person teams, can close a higher volume of deals and compete with larger firms.
“This is ultimately a cultural change from the ‘80s-style boiler room atmosphere to one where individuals have more control over their time,” he said.
Waters said that the combination of Covid-tech, smart home and office tech, and sustainability technology means that there will quickly be more sensors, in more commercial buildings, collecting more data than many can comprehend. The data will be there, it’s just a matter of how we use it, analyze it and let it shape the industry. While the exact impact of automation is still far off, the data-driven revolution predicted based on it seems inevitable.
"Right now, we need AI to understand the exact ways that AI will impact the workplace,” JLL’s Miscovich said. “It’s super complex.”