AI, Data Science and Commercial Real Estate
Do you remember the two-part Hawaii special “The Brady Bunch”? While this month’s column has almost nothing to do with it, sometimes good things come in twos (or more) – just like my thoughts on artificial intelligence. And luckily, in contrast to the Brady Bunch holiday in all inclusive, there is no enchanted tiki that brings bad luck.
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This month, our focus is on putting context and a foundation for what commercial property owners, operators, and investors need to know about AI. In short, you don’t need to know all about it, but you should at least understand how important AI is to our industry.
Image by geralt via Pixabay.com
For one, 45 percent of commercial real estate managers plan to increase their investments in AI and other technologies over the next 12 months. A wave of change is coming and AI will soon cease to be a competitive advantage and quickly become a must. Second, the potential use cases of AI are so valuable that I think they will proliferate over the next decade and move our industry forward in meaningful ways.
The good news is that we don’t need to understand how AI works (we can leave that to the tech specialists), we just need to understand how to use it. In other words, we just need to spend a little time understanding some real-world examples of AI from other industries, choosing the ones that work well for commercial real estate, and being patient with our technology and data teams as they do them Visions make reality come true.
This is where the work of technologists becomes particularly difficult. Not because the technology and capabilities have not been proven elsewhere, but because commercial real estate data is not what it needs to be. As someone else put it, “data silos have become the scourge of the 21st century,” and indeed the scourge of real estate, which is still largely paper-based. As an industry, it is imperative that we look at our data capabilities to pave the way for AI.
Do we still agree that AI is an important innovation for real estate? Well. Next, let’s discuss the problem I see with our collective understanding of AI to make sure we’re on the same page.
John D’Angelo
When you think of AI, a number of words may come to mind: science fiction, scary, confusing, threatening, promising, exciting, or maybe something else. In reality, AI is pretty simple – machines (electronic, mechanical, or a combination of both) that demonstrate the ability to mimic human intelligence and pattern recognition by “thinking,” learning, arguing, solving problems, or combining all of these things. Common forms of AI include machine learning, robot process automation, natural language processing, deep learning, speech recognition, bots, and more.
The interesting thing about AI and real estate is that the industry doesn’t need as many AI or data scientists as you might think – although they are important! We need more people who understand commercial real estate exactly what AI can do for it and how data science can help.
By combining the functional understanding of these topics, we can make advances in application and use AI to better operate a single asset or entire portfolio, decide where to invest or sell, help people become more efficient by doing more valuable work, and ultimately moving the industry into the current decade.
We all need to be smarter about these concepts and how they affect our industry. So next month I’ll be discussing how these topics can and are already being applied to commercial real estate use cases. Make no mistake, if you are still in real estate five years from now, by that point you will know more about AI – and data science – than you learned from my columns today, thanks to the dynamics that are building around them. But to get there, we must all continue to learn together.
John D’Angelo is Managing Director at Deloitte Consulting and leads the real estate industry for Deloitte Consulting in the United States. With over 33 years of experience as a management consultant to the global real estate industry, John has helped some of the biggest names in the industry. Real estate uses technology and uses data to optimize and transform their operations.
Read the May 2021 edition of CPE.