What do commercial real estate investors need to understand about artificial intelligence? How is AI changing real estate today? And what’s the future of AI in real estate?
AFIRE interviewed three experts on the subject and compiled a summary video designed to educate real estate executives and their teams.
“I believe real estate investors are underestimating two main things about the impact of AI on the industry,” says Matias Recchia, Co-Founder and CEO of Keyway, going on to say that the technology will create much more efficiency, and liquidity, than people realize.
“The reason you need artificial intelligence in commercial real estate is to allow for a new level of efficiency in interacting with the software,” says David Franklin, Principal, CRE & AI, Yardi. “It’s almost like the advent of the mouse…. It opened up the world to a whole new set of possibilities.”
“So much of the data that exists within commercial real estate is very unstructured,” says Drew Conway, Head of Data Science, Private Investments, Two Sigma. “Lease documents… offering memorandums… PDF files that are not connected or structured in any way. A lot of the technology that exists today… can really consume that data and produce structure very, very quickly… And some of that is already happening.”
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AFIRE POV interviews sum up how the industry’s experts are feeling about the most important topics in commercial real estate investing.
Established in 1988, the Association of Foreign Investors in Real Estate (AFIRE) is the association for international real estate investors focused on commercial property in the United States.
AFIRE currently welcomes more than 180 member organizations from 25 countries with approximately $3 trillion AUM in the US.
Yeah. Are we? Am I talking to you? Answer you? Are you for real? If you're an operator and you're looking to differentiate yourself from your competition, you're going to be looking out into the world of software and technology. And what you're going to find today is a lot of companies that are focused on artificial intelligence. I believe the real estate investors are underestimating 2 main things about the impact of AI in the industry. The first one is how much efficiency it's going to. And the fact that having access to all of the documentation real time is going to create much more liquidity in real estate. Many industries in the early 2000s started to adopt the idea of big data. As we moved into the 21st century, there's been a real kind of democratization and commoditization of not only storage, but processing and now sophisticated AI tools. Think about payables as an example. So artificial intelligence is really good at taking payable information. So think about an invoice that comes in trying to understand what's on that invoice and looking at patterns over time of how that invoice gets paid. So it's a great example of using a machine learning model to build software to help somebody be more efficient within the world of commercial real estate. So much of the, the, the data that exists within commercial real estate is very unstructured. And what I mean by that is much of the data. It just says documents. These could be leased documents, legal documents offering memorandums, But then there's also, you know, PDF files and Excel files that are not connected and not structured in any way. A lot of the technology that exists today, particularly, you know, some of the artificial intelligence technologies can really consume that data and produce structure very, very quickly. So a task that you might have assigned to a junior member of your staff, well, that may actually be highly automated and some of that is already happening today through. Know much more about a property and an area without even starting diligence so you can note about zoning and flooding and what's happening with traffic and what's happening with supply in that market and what's happening with the rent of that specific building versus buildings around it. So it's almost like you have a machine that's pre underwriting every property around and boiling the ocean to surface the opportunities that really matter for you. I think AI will give the possibility to real estate investors to become experts in every local market and understand every market as if they had lived in it for or transacted it for 20 years. Certainly, you know, 10 years from now it will be considered highly table stakes within a commercial real estate business to have your data and data science or artificial intelligence as a sort of underpinning to much of the work that we're doing in a way that I think will be quite seamless and. And somewhat ubiquitous. The reason that you need artificial intelligence in commercial real estate is to allow for a new level of efficiency in interacting with the software. It's almost like the advent of the mouse. Once the mouse came around, you had graphical user interfaces. It opened up the world to a whole new set of possibilities and new users that could take advantage of these very powerful tools, even in their nascent state with artificial intelligence and natural language processing and these generative AI. The new interface may simply be your voice, your face, just talking. Think about having an artificial intelligence that is like an employee who never takes coffee breaks. So you can talk to the system and ask you questions. What do I have to do today? Can you give me some advice on, you know, communicating with this tenant who owes me money? Maybe can you just write up the collections letter for me right in the system can do all of these types of things. So rather than sitting there with keyboard and mouse as a traditional knowledge worker. You're going to be interfacing using natural language as a new paradigm for how you use software in your day-to-day business.
