Long known for conducting business in a traditional way, the commercial real estate sector has been shaken up somewhat as it embraces innovative technologies, including artificial intelligence, more frequently, Alex Lange, vice president of strategy and innovation at the National Association of REALTORS, recently wrote.
“From construction to leasing, planning, occupation and investment, the world of commercial real estate is being revolutionized by a host of cutting-edge companies and technologies,” Lange said. “These aren’t fads or trends that are far off in the future: They are happening now. It’s already at the point of manifestation.”
Lange examined a number of emerging trends in CRE to see why certain technologies were becoming more prominent within the industry. Some of these trends included CRE growth and profits that were enjoyed during the past two years “returning to the mean,” affordability issues, less willingness to buy or sell property until rates settle, older offices being converted to residential spaces and CRE owners and investors feeling pressure to disclose their environmental, social and governance (ESG) efforts.
Environmental CRE trends
As previously mentioned, CRE owners face increased pressure to make their buildings eco-friendlier going forward. If they’re unable to meet future ESG standards, it won’t be because there was a lack of property technology (proptech) available, however. For example, Lange noted Internet of Things (IoT) connected heat pumps can enhance efficiency and reduce emissions. These heat pumps would be an improvement over traditional HVAC systems, which often rely on fossil fuels to heat buildings during winter months.
Additionally, IoT sensors can make buildings even more efficient with artificial intelligence models (AI) that can predict where and when heating or cooling is needed, based on past tenant behaviors. Suddenly, HVAC systems become proactive instead of reactive, which decreases how much upkeep building managers have to do.
Smart glass is another eco-friendly proptech innovation that can help reduce a building’s temperature control needs. By changing windows’ tint levels, smart glass can decrease how much heating or cooling goes out of a building’s window.
CRE construction time and cost-saving measures
Modular construction, manufacturing building components off site and assembling them on location, helps decrease construction time, labor costs and waste, according to Lange.
Advanced design software use and manufacturing techniques have helped make modular construction possible. The practice also allows for more varied architectural styles and building types and can make modular buildings more aesthetically appealing. Additionally, with construction happening on and off-site simultaneously, the project timeline is reduced (as well as labor costs) and there are fewer disruptions and environmental impact at the construction site.
From an eco-friendliness standpoint, modular construction uses more resource-efficient materials and construction methods. Less waste is generated during the manufacturing and assembly processes, and more energy efficient and green building practices are often put into place.
Meanwhile, building information modeling (BIM) has become more common, Lange said. BIM allows engineers, architects, and construction professionals to create detailed representations of buildings. The method helps make the design process more accurate and lets stakeholders collaborate in real time.
Implementing AI and IoT technologies has enabled BIM to deploy predictive maintenance and energy optimization as well as automate space utilization and management. It’s also become easier to collect and analyze data in real time.
AI and its impact on CRE
Generative AI is a specific type of artificial intelligence that uses deep learning algorithms to create new content. For CRE purposes, it could help people picture spaces and layout changes within the sector. If Generative AI can automate and optimize the design process, architects, interior designers, and clients can explore design options much easier.
For example, AI could create optimized space plans based on customized design requirements. Factors such as room dimensions, furniture arrangements and layout elements can be entered, and generative AI can deliver multiple options that fit the customized criteria. Customers and designers can view all of the different configurations more efficiently and pick the one they like best.
Additionally, AI can help CRE owners address their tenants’ specific needs. In an office space for example, the tech could create different designs for a co-working space depending on if a tenant wanted separate offices, an open space, conference rooms or a combination of the three. AI could also generate personalized designs based on an individual’s preferences, such as style, color schemes or any functional requirements they might have.
“AI technologies are playing an increasingly critical role in helping investors navigate the complex world of commercial real estate,” Lange wrote. “By providing data-driven insights, predictive analytics, and enhanced decision-making capabilities, AI can support investors in understanding market conditions, identifying deals, and optimizing their investment strategies.”
