Artificial Intelligence (AI) is transforming industries worldwide, and the corporate real estate (CRE) sector is no exception. The “Colliers Global AI in CRE Report 2024” provides an in-depth exploration of how AI is reshaping CRE, offering significant breakthroughs and long-term benefits. The report covers various aspects of AI’s 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 gearing up to integrate AI into their operations. According to the data:
- 33% plan to implement AI within the next two years.
- 26% aim to do so within the next year.
- 12% expect to adopt AI within the next six months.
- 12% anticipate implementation within the next five years.
- 9% have already implemented at least one generative AI solution.
- 7% have no specific timeframe in mind.
AI Categories in CRE
Colliers has identified six primary categories of AI that are currently being utilized or expected to be adopted soon:
- Natural Language Processing (NLP) – 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 human expert decision-making abilities in specific domains.
- Generative Models – Generates content such as images or text based on 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 data management and standardization. Colliers emphasizes five key focus areas for successful AI implementation:
- Transparency – Standardizing and sharing data across CRE firms to utilize AI’s full potential.
- Comprehensive Data – Ensuring data is comprehensive and unbiased for accurate AI application.
- Governance – Developing data governance programs to minimize risk and ensure data accuracy.
- Data Volume – Leveraging the vast amount of data in CRE for effective AI training.
- Data Management – Efficiently managing and regulating data access and integrity.
AI’s Projected Impact on CRE
Economic Impact
By 2030, AI could automate activities that account for up to 30% of hours worked in the US economy, significantly impacting productivity and economic value. McKinsey estimates generative AI could add $2.6 trillion to $4.4 trillion annually to the global economy. However, this also means up to 12 million occupational transitions may be necessary by 2030, with 80% of affected jobs falling into four major 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 projected to grow at a compound annual growth rate (CAGR) of 57.8% from 2023 to 2028, reaching $36.4 billion by 2028.
AI in CRE Service Delivery
Key Areas of Impact
AI is poised to revolutionize several CRE service areas, including:
- Location Intelligence – Identifying new and emerging talent pools and locations.
- Supply Chain Solutions – Predicting real-time adjustments to demand forecasts or inventory requirements.
- Project Management – Optimizing resource allocation and cost management.
- Transaction Management – Enhancing location options with automated workflows.
- Workplace Advisory – Generating different occupancy and 3D space options.
- Lease Administration – Streamlining processes with OCR AI technology.
- Portfolio Strategy – Continuously optimizing portfolios with predictive analytics.
- Facility Management – Implementing anticipatory building maintenance and automated notifications.
Case Studies and Examples
Lease Administration
- Issue: An energy company faced a cyberattack, disabling all systems.
- Solution: Colliers used AI OCR to extract details from over 40 images, achieving a 90% capture rate and notifying over 400 landlords of payment delays.
Facility Management
- Current: Facility managers collaborate to reduce costs and enhance employee experiences.
- Future: Predictive analytics and machine learning will optimize energy use and preventative maintenance, leveraging IoT devices for enhanced facility management.
Supply Chain Solutions
- Current: Consultants use spreadsheets for demand forecasting.
- Future: AI will enable real-time adjustments based on operational and external data, optimizing supply chain efficiency.
Workplace Advisory
- Current: Consultants design customized workplace solutions.
- Future: Machine learning will analyze survey data and generate 3D renderings, enhancing employee experience.
Portfolio Strategy
- Current: Consultants analyze portfolio data to align with business goals.
- Future: Machine learning will provide real-time recommendations on market trends and optimal property mixes.
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 concept 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 analysis for better decision-making.
Additional Considerations
Emerging Job Roles
AI will create new job opportunities within CRE, such as AI ethics experts, security engineers, AI-enabled property managers, and AI trainers.
Ethical Concerns
AI raises ethical concerns, particularly regarding data privacy and the use of proprietary information. Companies must balance effective AI utilization with maintaining ethical standards.
Benefits of AI Implementation
AI can minimize errors, increase profitability, streamline processes, and foster innovative problem-solving.
Industry Outlook
AI is expected to have a transformative impact on CRE, comparable to the advent of the internet. The technology’s rapid evolution presents a golden opportunity for CRE firms to gain a competitive edge.
Conclusion
The integration of AI in CRE offers substantial benefits and opportunities for innovation. By addressing challenges related to data management and ethical considerations, CRE firms can harness AI’s potential to enhance service delivery, optimize operations, and drive economic value. As AI technology continues to evolve, its impact on CRE will only grow, making it essential for industry leaders to stay ahead of the curve and embrace AI-driven solutions.
To learn more readers should download the Global AI in CRE Report 2024.
