Improving efficiency and decision-making, artificial intelligence holds plenty of promise to boost performance in CRE.
A sign of artificial intelligence’s potential is that the boundaries and limitations for the developing technology aren’t fully understood. The applications — from machine learning and advanced analytics to robotics and systems processing — are currently in development, with AI proponents bullish on impacts that could reshape much of our world.
John D’Angelo, managing director at Deloitte Consulting, which launched its Deloitte AI Institute last year, specializes in operational transformation in real estate operating companies, investment managers, and service providers. He sees commercial real estate as an industry that could greatly benefit from development in AI and adjacent technologies.
“What we are doing right now with AI — and what our mission is – is to think about pushing boundaries of what is possible,” he says. “But really, AI doesn’t replace people. It is something that is most powerful when it works with people and [as a part of] people’s instincts, intuition, and judgement. AI is best when married together with the kinds of things that people are fundamentally good at.
Automation, robotics, and AI can be scary topics for many who have seen headlines about major job sectors potentially becoming obsolete. Think of travel agents before the rise of aggregating sites like Expedia, Priceline, and Orbitz. Commercial real estate professionals provide services that may require more in-depth knowledge of local markets and property types. But the natural fear is there — if it happened to them, could it also happen to me?
Not quite, according to D’Angelo. Many applications involving AI are directly focused at minimizing work, but it’s not the high-level executive functions that are threatened.
“There’s fear [of AI] taking work away, but frankly,” he says, “we are talking about the type of work that is not particularly enriching for people to be doing. The big opportunity to use technology is to shift your focus to high-value activities.”
Data entry, for example, is not the bread-and-butter work of highly performing brokers or investors. And what if data could be collected, collated, and packaged for CRE professionals without the human legwork usually associated with it?
“The pot of gold at the end of this technology rainbow is freeing up people to do better things,” D’Angelo says. “If new technologies can capture data and put it to work, you can improve decision-making. You can see its value and how it can be applicable in improving performance.”
The implications of the COVID-19 pandemic are still playing out, but such disruption across CRE industry sectors will have plenty of professionals examining business practices and looking for improved efficiencies in processes. Just as the pandemic led to a boom in e-commerce, it could also make many CRE practitioners more willing to adapt and leverage technology.
“We’ve seen over the last decade, especially the last two or three years before the pandemic, a growing awareness or curiosity,” D’Angelo says. “Many people were asking, ‘Where do I apply technology?’ and ‘How do I best use analytics?’ But I think in a very real way, we’ve seen that accelerate over the last year — and I think this is going to pay big dividends as we play out the next decade."
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Technology will have a major role in the much nearer future as everyone learns to live in a world opening up from COVID-19. CRE sectors will have markedly different priorities, experiences, and demands. But office is a great starting point for a discussion of just how people will safely and effectively return to a workplace.
“In many ways, office is going to be a poster child in the advancement of technology adoption,” D’Angelo says. “AI can improve building maintenance, for instance, by helping you understand when a major mechanical system needs to be replaced before it goes up in smoke. A smart building can know how people are using different spaces so you can decrease electricity and AC costs.”
While steering clear of the “creepy” factor, like when a building or office knows too much about you, these applications can ensure heavily trafficked areas are properly cleaned. Or elevators function in a way where social distancing is respected.
“A ton of data from building systems and sensors can be used to improve our decision-making,” D’Angelo says. “We have all these cases where we are raising the IQ of a building and, in turn, producing a bunch of benefits for the industry.”
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