49% of CRE leaders want more AI – Here's why

Business Journals

17 hours ago

The commercial real estate market still faces many challenges and executives are looking for ways to lower costs — many are turning to technology.
In Citrin Cooperman's latest survey of 440 commercial real estate leaders in conjunction with the Commercial Observer, respondents said AI was their number one opportunity over the next 12 months. They ranked it above new property management systems, better cybersecurity, more process automation, solar, listing services, and all else. Though as we will explore, AI has potential to help in nearly all of these areas as well.
Using AI to model building information
The No. 1 AI use case, 34% of respondents
Leaders say the most common use for AI right now is modeling building information. In some cases that means working with geospatial information, such as using AI to visualize floorplates or run feasibility studies. A feasibility study provider can now use software to generate dozens of options for consideration in days rather than months. But modeling can also mean financial modeling, such as running the numbers on what it will take for a property or portfolio to achieve NOI.
Current AI technologies can also help corporate development teams determine where buildings should go. The AI platform SiteZeus can ingest cell phone, traffic, parking, real estate, walkability, weather, and other data sources to show teams on a map the exact spots they should select. Some franchisors are providing this tool to their franchisees.
AI cannot do everything, however. At least not without assistance. It cannot, for example, figure out how to actually put those real estate deals together. It cannot validate those decisions, run studies on the revenue or tax impact implications, nor advise on which financial instrument to use.
To discuss how to turn the information generated by a real estate AI tool into reports, decks, and models your team can make decisions on, please reach out to Citrin Cooperman's Digital Services Practice.
Using AI to source and match deals
The No. 2 AI use case, 20% of respondents
Teams can use AI to source and sort through deals. AI tools can scan all possible opportunities and rank them by the commercial team's requirements. Typically, commercial teams lose a great deal of time on market research, outreach, screening, and due diligence. AI tools are one way for them to reclaim and repurpose it.
The software Skyline AI by JLL, for example, provides real estate investors with a data-driven view of their market that goes much deeper than typical census data, with a view of factors such as opportunity zones. C3.ai offers automated commercial property appraisals and automatic document review, so brokers can save hours on reviewing leases, loan agreements, operating agreements, and more. Tools like Vena or Power BI can also reveal deal insights within your existing data: Your team can use them to create smart dashboards to forecast continuously without requesting new reports.
AI tools do have one weakness: They are only as good as the data within your ERP system, which most real estate firms have not updated in years. A Citrin Cooperman survey of 1,000 private companies found that 42% of real estate companies say their number one blocker to adopting AI is 'integrations with existing enterprise resource planning (ERP) systems.'
Our Digital Services Practice can review your ERP system to understand if your workflows and data are set up for you to use in deal-sorting AI.
Property management
The No. 3 use case, 20% of respondents
Commercial real estate companies are using AI to directly manage their properties, plugging it into property management software to spot trends. This allows managers to see if vacancies are subtly rising so they know to invest in more marketing or start offering concessions. Similarly, they can spot fluctuations in utility and repair costs. Some smart devices like Omnidian for solar or Checkit for commercial appliances can detect near-imperceptible shifts in electrical device power signals to understand when they need maintenance — and auto-dispatch a technician for preventative maintenance.
The 'smart' property trend can also be smart for tax reasons — investing in your building's service-layer can help you improve the amenities and take advantage of tax credits. Smart and environmentally rated devices may pay for themselves. More smart-devices and self-serve check-in kiosks and building management apps can also mean less need for staff walking the floors. This does not always mean fewer employees, but it does mean shifting those roles to other departments and may require you to review your union contracts and local employment regulations.
Finance
The No. 4 use case, 9% of respondents
Finally, commercial real estate teams are using AI to complete finance tasks. Many of these AI systems are coming into the real estate world through general applications, such as how Google's Gemini assistant is now available in Google Sheets. Whereas some are specific to real estate. The software Yardi offers a type of smart spreadsheet reporting that Citrin Cooperman Managing Partner of Business Process Outsourcing Mike Zyborowicz calls the Swiss Army Knife of property management and notes that, 'It enables you to do everything from managing your assets to crunching numbers so you can better manage tenant satisfaction or overhead expenses.'
What AI tools will not do, however, is certify the results of studies around how to increase occupancy and improve company profitability. Nor can AI tools yet look forward to advise on where the market is headed and suggest new configurations for your capital stack, such as preferred equity or mezzanine debt.
AI works best when supported by a financial advisor
AI has vast potential in the commercial real estate sector and is one sure way to help reduce costs. But it is never as easy as 'plug and play.' To turn your team's AI pilots into actionable insights your firm can place class-A bets on, you may need a financial firm that specializes in advisory, audit, assurance, tax, and technology. Only then can you ensure the data within your systems is worthy of basing decisions on, and that you have considered the full breadth of financial and tax implications.
To discuss how Citrin Cooperman's Real Estate Industry Practice can help your business reduce operating expenses with investments in AI, and maximize the tax benefits of such investments, reach out to Jessica Garber or Adam Lazarus.
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