Artificial intelligence (AI) is transforming industries around the world, and the corporate real estate (CRE) sector is no exception. THE “Global AI Collars in CRE 2024 Report» offers an in-depth exploration of how AI is reshaping CRE, delivering significant advancements and long-term benefits. The report covers various aspects of AI impact focusing on key areas such as implementation, benefits, challenges and future opportunities.
The Current Landscape of AI in CRE
AI Implementation Plans
A significant portion of CRE leaders are preparing to integrate AI into their operations. According to the data:
- 33% plan to implement AI over the next two years.
- 26% aim to do so over the next year.
- 12% we hope to adopt AI in the next six months.
- 12% plan for implementation within the next five years.
- 9% have already implemented at least one generative AI solution.
- 7% I don’t have a specific deadline in mind.
AI Categories in CRE
Colliers has identified six main categories of AI that are currently in use or expected to be adopted soon:
- Natural Language Processing (PNL) – Understands, generates and interacts with human language.
- Machine learning (ML) – Learns from data and improves its performance over time.
- Predictive analytics – Analyzes historical data to predict future trends.
- Expert systems – Mimics the decision-making capabilities of human experts in specific domains.
- Generative models – Generates content such as images or text from large datasets.
- Computer Vision – Analyzes and interprets visual information from the world.
Challenges and key focus areas
The novelty of AI introduces challenges, particularly in terms of data management and standardization. Colliers emphasizes five key areas for successful AI implementation:
- Transparency – Standardize and share data between CRE companies to use the full potential of AI.
- Full data – Ensure that data is complete and unbiased for accurate application of AI.
- Governance – Develop data governance programs to minimize risks and ensure data accuracy.
- Data volume – Leverage the large amount of CRE data for effective AI training.
- Data management – Effectively manage and regulate data access and integrity.
Projected impact of AI on CRE
Economic impact
By 2030, AI could automate activities that account for up to 30% of hours worked in the U.S. economy, having a significant impact on productivity and economic value. McKinsey estimates that generative AI could generate between $2.6 trillion and $4.4 trillion annually to the global economy. However, this also means that up to 12 million job transitions could be required by 2030, with 80% of affected jobs falling into four main occupations.
Market growth
Investor interest in generative AI continues to soar, with significant funding increases:
- 2017: $1.0 billion
- 2023: $29.1 billion
Generative AI market revenue is expected to grow at a compound annual growth rate (CAGR) of 57.8% between 2023 and 2028, reaching $36.4 billion by 2028.
AI in commercial real estate service delivery
Key impact areas
AI is poised to revolutionize several CRE service areas, including:
- Location Intelligence – Identify new and emerging talent pools and locations.
- Supply Chain Solutions – Predict real-time adjustments to demand forecasts or inventory needs.
- Project management – Optimize resource allocation and cost management.
- Transaction Management – Improved localization options with automated workflows.
- Workplace advice – Generation of different occupancy and 3D space options.
- Lease administration – Streamline processes with AI OCR technology.
- Portfolio Strategy – Continuous optimization of portfolios through predictive analysis.
- Facilities Management – Implementation of early building maintenance and automated notifications.
Case studies and examples
Lease administration
- Issue:An energy company was hit by a cyber attack, disabling all of its systems.
- Solution:Colliers used AI OCR to extract details from over 40 images, achieving a 90% capture rate and notifying over 400 homeowners of late payments.
Facilities management
- Current:Facilities managers collaborate to reduce costs and improve the employee experience.
- Future:Predictive analytics and machine learning will optimize energy consumption and preventative maintenance, leveraging IoT devices for better facility management.
Supply Chain Solutions
- Current: Consultants use spreadsheets to forecast demand.
- Future: AI will enable real-time adjustments based on operational and external data, optimizing supply chain efficiency.
Workplace advice
- Current: Consultants design custom workplace solutions.
- Future:Machine learning will analyze survey data and generate 3D renderings, improving the employee experience.
Portfolio Strategy
- Current: Consultants analyze portfolio data to align with business objectives.
- Future:Machine learning will provide real-time recommendations on market trends and optimal property combinations.
Location Intelligence
- Current:Studies identify ideal locations for hiring needs.
- Future: Predictive analytics will automatically recommend locations based on market trends and talent availability.
Project management
- Current:Project managers oversee resource management.
- Future: Generative AI will create designs, cost estimates and safety plans, improving project efficiency.
Transaction Management
- Current:Managers organize real estate transactions.
- Future:AI will automate workflows, create marketing strategies, and provide market analytics for better decision making.
Additional Considerations
New professions
AI will create new job opportunities within commercial real estate, such as AI Ethics experts, security engineers, AI-enabled property managers and AI trainers.
Ethical concerns
AI raises ethical questions, particularly regarding data privacy and the use of confidential information. Businesses must strike a balance between using AI effectively and upholding ethical standards.
Benefits of implementing AI
AI can minimize errors, increase profitability, streamline processes, and drive innovative problem solving.
Industry Outlook
AI is expected to have a transformative impact on CRE, comparable to the advent of the Internet. The rapid evolution of technology presents a golden opportunity for CRE companies to gain a competitive advantage.
Conclusion
The integration of AI into commercial real estate offers significant benefits and opportunities for innovation. By addressing data management challenges and ethical considerations, real estate companies can harness the potential of AI to improve service delivery, optimize operations, and generate economic value. As AI technology continues to evolve, its impact on commercial real estate will only grow, making it critical for industry leaders to stay ahead of the curve and adopt AI-powered solutions.
To learn more, readers should download the Global Report on AI in CRE 2024.
