How will AI impact the Future of Real Estate?

Technology leaders at forward-looking real estate organizations have been experimenting with AI for many years. But with so much hype around the technology, how do you decide which use cases will benefit the most?

In this white paper, we’ll look at how real estate owners, operators, occupiers, and investors are already leveraging AI-enabled PropTech to positively impact the business. As more companies adopt AI, specific use cases and applications have emerged, offering guidance for how to prioritize AI for your business and productivity functions.

One thing is already clear: the fear of artificial intelligence is waning. Today’s consumers are more accustomed to using AI tools in their personal lives, and the psychological shift is one of the main factors in broadening the business use of AI for PropTech. But the most important drivers of AI adoption are the tangible achievements around efficiency, productivity, automation, insights, and decision-making.

But first, data. Data has always been an essential part of the industry, but without a data governance plan, real estate organizations won’t be able to fully leverage AI technology. Teams need to better understand the data they actually have and how to effectively use it. The business benefits and unprecedented efficiencies of AI solutions will drive the need for data governance initiatives so that real estate firms can truly get the most value from their technology.

To successfully benefit from AI technology, real estate companies need to take time to understand and document the data available to them and determine the most impactful scenarios for their business.

– Carla Hinson, VP of North America Solutions, MRI Software

Likewise, IT teams are very aware that employees are experimenting with AI tools, so they will become more proactive to determine the best use cases and gain control over technology use within the organization. Like any new system implementation, AI tools require careful evaluation and planning before rolling out the solution to the business.

To see where AI is making the biggest impact, look no further than commercial leasing. AI-powered document abstraction is a popular tool used by lease administrators and others to extract data from leases and make decisions that mitigate risk for the business.

In today’s economy, managing a real estate portfolio requires more agility than ever, and AI-powered lease abstraction tools enable real estate owners, occupiers, and investors to scan and abstract leases, contracts, and other documents in minutes instead of hours or days. It’s simply not realistic for humans to sift through large volumes of data to find a needle in a haystack. AI is the ideal technology to quickly deliver data and insights and drive strategic decision-making. It’s easy to see why this is one of the most popular use cases for AI.

In the year ahead, lease abstraction will continue to gain popularity and save significant time for real estate firms.

It can take days, hours, or weeks to go through hundreds or thousands of leases. AI is enabling people to reduce errors and discrepancies by simply doing a quick review on the back end instead of doing all the work themselves.

– Mike Inge, MRI Contract Intelligence Sales Leader, MRI Software

AI will play an even bigger role in helping organizations predict asset failure, particularly for high dollar assets like commercial HVAC units. Knowing when these items will fail gives teams an opportunity to plan for the replacement expense, making costs more predictable and ultimately saving time and money.

How does it work? AI can analyze data from sensors on your assets, determining patterns and
anomalies to alert FM teams of potential problems before they affect performance. Are you getting the most value from your assets, or are they failing a few years earlier than the manufacturer’s warranty? Are there environmental conditions affecting the longevity of your assets? The combination of AI and IoT devices will help facilities management teams monitor the activity in greater detail and make better decisions.

Using AI to predict asset failure requires a lot of data, and in the year ahead, organizations will continue trying to understand if they have the capability to leverage it or if they need to implement new solutions to achieve it.

Leveraging AI in predictive maintenance helps minimize downtime, reduce repair costs, and extend the lifespan of critical infrastructure. Integrating data from multiple sources is key to a comprehensive understanding of your building operations.

– Catie Sirie, SR. Director, MRI Software

Hybrid and flexible work arrangements have become commonplace in the office sector, and such policies have created variable usage scenarios that are challenging to manage. Many businesses can no longer anticipate the number of workers that will use the workspace during specific time periods, resulting in fewer predictable patterns for space and energy usage.

AI-enabled tools for desk booking, room booking, and space utilization can help facility and property managers strategically support business performance by recommending optimal seating based on a team’s collaboration requirements — fostering communication and teamwork for individuals that work closely together.

AI technology can recognize patterns in workspace usage, identify anomalies, and call attention to spaces that aren’t being utilized effectively – enabling management to make informed decisions about space usage and office layouts.

Using AI for workplace management not only creates opportunities for commercial real estate owners and operators to gain efficiencies around space utilization and energy management; it also elevates the strategic importance of facility managers and onsite teams.

Knowing the number of employees in a space during specific times helps determine the most effective use of space and what the future of your footprint might look like. The ability to pivot based on real-time information drives smarter decisions.

– Nick Frank, Sr. Director, MRI Software

Energy management will be a key factor in improving cost control and efficiency. Combining space utilization data with footfall and energy data provides an even more holistic picture of the workplace – improving the tenant experience along the way.

For example, a notification about hot or cold temperatures in an area with no foot traffic may be a sign of inefficient energy consumption, presenting an opportunity to optimize heating and cooling systems based on actual usage patterns. With the right data at hand, office buildings can proactively optimize temperature, lighting, and more – meeting tenant expectations and preventing complaints. Leveraging AI to unify data from different systems delivers timely insights, contributing to both cost savings and sustainability efforts within the organization.

As more businesses put return-to-office policies in place, commercial owner/operators have an opportunity to gain ROI by capitalizing on exceptional tenant experiences. Today’s tenants expect simplicity when it comes to interacting with their workplace. Self-service tools that enable tenants to submit maintenance requests, make reservations for common areas, and even make payments will make communication between tenant and landlord more efficient.

AI can look at large data models to analyze historical trends, identify energy usage patterns, and flag spikes in consumption, all of which can reduce capital and operating expenses. Businesses can reduce energy consumption by using AI to analyze a holistic view of data, including weather and other environmental factors, to determine when the heating or cooling should turn on or off.

– Andy Birch, VP, MRI Software

For several years, AI tools have been refining and honing their ability to automate tasks that reduce the burden on property managers and onsite staff. These unsung heroes of the multifamily sector wear many hats – they’re expected to be marketers, accountants, customer service managers, and even detectives to sniff out fraudulent applicants.

Thankfully, AI tools have evolved to not only reduce stress for property managers but also to drive real business results, enabling a connected lead-to-lease experience.

Attract and engage prospects – Multifamily communities no longer have to settle for robotic AI chatbots that confuse instead of clarify. AI with natural language response offers question-and-answer capabilities that facilitate meaningful interactions at all stages of the prospect, applicant, and resident journey.

Improve the tenant experience – Integrated AI solutions build lasting connections with residents by addressing inquiries and service requests 24/7.

Prevent fraud – ID verification tools with AI and facial recognition can instantly alert on-site teams to fraudulent applicants and prevent them from moving into the community.

Automating the property marketing and leasing process drives a better tenant experience and maximizes occupancy.

AI can impact tenant satisfaction in multiple ways. It keeps communities more secure by ensuring tour safety and verifying applicants’ identities. When chatbots take care of repetitive tasks and inquiries, onsite staff have more time to provide great service to residents.

– Brian Zrismsek, VP, MRI Software

Modeling and analysis exercises are no longer exclusive to investment firms. Strategic decision- making is becoming mainstream for all types of real estate organizations. As interest rates continue to fluctuate, companies can evaluate whether to remodel, divest office buildings, or expand into new asset classes.

Making these decisions quickly and correctly requires data from multiple sources. AI can standardize and ensure the accuracy of this data, fueling more effective analysis.

AI will accelerate the data collection process, providing companies with deeper insights for better decision-making.

AI facilitates the consumption and analysis of vast amounts of data in minimal time—data that is key to making smart decisions. Risk and strategy teams are able to much more efficiently run hypothetical analysis, portfolio sensitivity analysis, and evaluate strategies to diversify, refinance, or otherwise drive optimal fund performance.

– Arik Kogan, Director, MRI Software

AP automation tools have been making life easier for real estate organizations for decades, but the addition of AI simplifies the process even more. Beyond AP automation, we anticipate that AI will be applied to more complex accounting functions in the near future, including:

Bank reconciliation

Lease auditing

Cash flow prediction

AI technology can also support credit control, helping landlords and tenants alike by predicting potential defaults before they happen. By sending reminder letters automatically, the software can reduce the number of late payments and improve cash flow without the need for human oversight.

AI-enabled PropTech isn’t just a trend – it’s here to stay. The opportunities for real estate organizations are growing every day, but prioritizing how to apply it to your business isn’t always straightforward.

Think about what you want to achieve with AI. Are you looking to reduce manual work, gain better insights, save time or money, or all of the above? The use cases presented here serve as a starting point to help you set goals and realize what’s possible.

During your AI journey, remember that not all PropTech providers are created equal. Experienced, knowledgeable providers with a responsible AI framework and strong data protocols will be your best guide in the new era of AI.

MRI Software is a leading provider of real estate software solutions that transform the way communities live, work and play. MRI’s open and connected, AI-first platform empowers agents, owners, operators and occupiers in commercial and residential property organizations to innovate in rapidly changing markets. MRI has been a trailblazer in the PropTech industry for over five decades, serving more than six million users worldwide, including the public and affordable housing sector. Through innovative solutions and a rich partner ecosystem, MRI gives real estate companies the freedom to realize their vision of building thriving communities and stronger businesses. For more information, please visit mrisoftware.com.