AI and Machine Learning: Enhancing CRE Technology
March 20, 2020
A large focus of the commercial real estate market has turned to technology that can help better serve appraisers, landlords, owners and customers/tenants. It might be a bit of a stretch to think Google Home or Amazon's Alexa will be providing CRE insights anytime soon, but these days, more commercial real estate investors are utilizing artificial intelligence and machine learning to help produce forecasts and valuable insights on property performance, long-term tenant behaviors, and project development.
Tech is creating efficiencies across various areas of the CRE industry. The near-term impacts of adopting these technologies are potentially monumental for appraisers and their customers. But in order to successfully do so, it’s important to know how certain tech works and how to apply it to CRE processes. Let’s take a look at artificial intelligence and machine learning, and how each applies to commercial real estate.
What is AI and Machine Learning
Artificial intelligence is defined as "the capability of a machine to imitate intelligent human behavior." Essentially, it's any computer program or tech system that can imitate human intelligence, and "learn" through a series of trial and error. By doing so, the computer system can solve problems, forecast outcomes, and generate solutions based on the data it processes over time.
Machine learning, a subset of AI, is the computer science dedicated to helping machines learn and improve without being explicitly programmed.
AI and Machine Learning in CRE
While technology is continuously changing and improving, there are three important applications for artificial intelligence and machine learning in commercial real estate.
In the past, appraisers spent hours poring over potential leads, examining past and present forecasting data and coordinating management. Today, technology can handle many aspects, and those can be boiled down to three main application components.
There are computer apps that help appraisers identify, analyze, and oversee all properties in their portfolios. Certain programs usually focus on financial analysis, market data analysis, or property acquisition. Used together, this tech creates a more efficient and accurate market for appraisers, investors, and their associates.
An appraiser might download AI programs and identify geographic locations that CRE clients are interested in. Then, the user would be able to input other data about market performance, preferred keywords, and additional criteria. Using this data, the system will use machine learning to identify potential markets and sites that match an investor's or customer's preferences.
For commercial property investors and landlords, AI tech can help digitally identify ideal tenants, screen them, and notify the owner of application approvals. Machine learning allows these computer applications to determine which tenants match a landlord's specific requests. Of course, property managers should still meet with potential tenants face-to-face before signing a commercial or residential lease. But AI can perform much of the screening process upfront, freeing up hours of valuable time.
Secondly, AI and other CRE tech helps attract and keep tenants. By equipping a retail or apartment buildings with smart technology, AI office solutions, or other technological advances, a property manager can attract stronger tenant potentials. Real estate technology doesn't just serve the investor, but also increases tenant retention and increases property value.
AI and machine learning are also helping CRE investors, brokers, and property managers spend less time on mundane tasks. Apps can digitally manage everything from tenant applications to maintenance requests. These applications make commercial property management easier for both manager and tenant.
Artificial intelligence and machine learning are revolutionizing commercial property management. We use several AI applications to keep both owners and tenants completely satisfied.
Will Tech Replace Appraisers?
While CRE tech will definitely continue to play a more significant role in the industry as we move forward, nothing will ever be able to replace experience and the important face-to-face connection of an appraiser and a client. Reputable, knowledgeable commercial real estate brokers, appraisers, property managers, and the like aren't going anywhere soon.
Real estate tech is most effective when combined with a professional appraiser. At Valbridge, we know both the market and how to accurately interpret the data. Without the human component, AI is essentially worthless.
Still, real estate tech should not be ignored or underutilized. That’s why we at Valbridge take a comprehensive tech and human-connection approach to the appraisal process. Reach out to us today to learn more.