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Commercial real estate is thought by many to be a change-averse industry but a new report from JLL says artificial intelligence is coming for it anyway — and that there is enormous potential in their meeting.
“For commercial real estate, it’s clear that strategically embracing AI could transform the sector,” the report’s authors wrote.
Artificial intelligence and generative AI, which creates new images or designs based on prompts, were highlighted among the top three technologies expected to have the biggest impact on real estate, according to a real estate technology survey JLL will publish later this year.
In the short term, JLL predicts that AI companies and the growth of the industry will create a wave of new occupiers and lead to increased real estate demand. JLL expects AI companies’ demand to reach 17.2M SF by the end of this year in the U.S., where JLL estimates that 37% of AI companies are based. That growth is expected in areas where AI companies have already clustered, such as San Francisco, Boston, Seattle and New York.
Further down the road, the AI industry will also require infrastructure improvements — better energy grids, for example — as well as more data centers, likely heightening the demand for these asset types.
Changes could also be in store for the real estate industry itself, the company said.
JLL anticipates the incorporation of “AI-powered underwriting and processes” that would make transactions faster while allowing for more information to be acquired about properties and the markets they are in.
Though the potential of AI for commercial real estate may be great, the report underlined another critical element: Respondents to that upcoming JLL survey on real estate tech said that of all the technology that’s out there in CRE, including virtual reality, robotics and blockchain, they had the least understanding of AI.
JLL is a believer in AI, having acquired two AI startups in the last two years. This year, it invested in Elise AI, which provides property management services for multifamily and single-family assets.
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