Making the Machines Work for You
Various aspects of big data, AI and Machine Learning have been reported extensively in this space and elsewhere. I’ll use this opportunity to highlight some key points that I think are particularly important to helping the commercial real estate industry benefit from these capabilities.
Just what are we talking about? "Big data” means large, complex data sets that most traditional software platforms can’t manage. AI refers to computer systems that can perform tasks normally requiring human intelligence. Machine learning, a form of AI that enables systems to "learn as they go" without being explicitly programmed, supports informed decision-making by assembling and analyzing property information more quickly and more accurately than other systems. The expansion of digital data availability, computing power and software enhancements, along with cheap storage, have made these options viable for commercial real estate.
What are the commercial real estate benefits of AI and Machine Learning? AI and Machine Learning can give companies better-structured data that improves business performance. For example, AI systems can detect patterns in conditions affecting energy consumption without being requested, then optimize the target temperature every 30 seconds to ensure comfort without using more energy than necessary. They can also learn from past performance to react to changes in occupancy, weather and other factors. All this translates into better performance through lower utility, energy and equipment maintenance costs; increased tenant comfort that reduces service calls and increases retention; regulatory compliance; investor satisfaction; and higher ENERGY STAR® scores. In short, AI saves energy and money while creating more comfort than humans could do on their own.
More accurate lease abstractions, automated underwriting and valuation models, market demand and value predications, facilitated due diligence, precise marketing, sales and acquisition targeting and better identification of risks and trends are just some of the other benefits that AI can deliver to property managers.
Being able to accurately model asset values or the potential returns of future development offers property owners and managers an immense competitive advantage. Predictive tools can also give landlords and tenants valuable new insights into local conditions that shape leasing decisions. Smart building security systems also leverage AI and Machine Learning to control property access.
Why has commercial real estate for the most part been slow to adopt these tools? For one thing, property managers historically had to aggregate data from multiple disparate systems, transform it into a usable format, and load it into a database. This was time-consuming and cumbersome. Over the past decade or so, advances in property management software superseded this process by consolidating all business data on a single connected platform that doesn’t require the degree of custom design that aggregation systems required. That has helped make AI, once only practicable for large companies, available and affordable for virtually any company of any size.
Equally to the point, AI has been misunderstood in some quarters. One misperception holds that AI systems are difficult and costly; the truth is, they’re often low-cost, easy-to-implement solutions that pay back quickly. In fact, they can be easier to implement and maintain than non-AI control systems that require complex programming and updates. AI systems can also be implemented incrementally to produce small initial savings that build the foundation for full automation.
Perhaps the biggest problem with AI is the belief that it replaces people and assumes control. In truth, AI systems work best when coupled with smart, expert humans. AI can help workers do their jobs better by relieving manual tasks, which allows more time to strategize and execute other value-add activities.
So, what’s next? The future of AI and Machine Learning encompasses a single-platform, mobile-enabled cloud system for managing real estate portfolios in a competitive market. Used properly, these capabilities can increase rents, lower costs and increase asset value in a way that no other force in the industry can. The continued development and adoption of AI will provide enhanced operational efficiencies, advanced employee productivity and improved customer service in nearly every facet of commercial real estate, from the optimization of energy to the financial forecasting of portfolios.
This Week’s Sponsor
Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit yardi.com.
UPCOMING REALCOMM WEBINARS
COMMERCIAL REAL ESTATE & Technology – The Importance of Developing a STRATEGY - 9/19/2019
It wasn’t long ago that a Commercial Real Estate CIO was responsible only for functions such as networking, file and print servers, computer hardware, desktop applications and e-mail. Over the last 5+ years other responsibilities have entered the sphere of the CIO including marketing, operations (smart buildings), occupant experience and cybersecurity, to name a few. Additionally, emerging technologies such as AI, Machine Learning, Blockchain, AR/VR, autonomous, robotics and others are impacting their world as well as their clients. Never before has it been so important for a Real Estate CIO to develop a comprehensive digital strategy, encompassing all aspects of the organization. This webinar will focus on the importance of developing a comprehensive digital strategy.
Founder of Realcomm Conference Group, an education organization that produces Realcomm, IBcon and CoRE Tech, the world's leading conferences on technology, automated business solutions, intelligent buildings and energy efficiency for the commercial and corporate real estate industry. As CEO, Jim interacts with some of the largest companies globally pertaining to some of the most advanced and progressive next generation real estate projects under development.
Ilan Zachar is currently Chief Technology Officer at Carr Properties, a privately held REIT known for its portfolio of trophy-quality properties in the Washington D.C. In this role, Ilan leverages vision and foresight to cross-pollinate best practices, processes, systems and resources across corporate operations/affiliates. Under his leadership, this has resulted in improvements in bottom-line costs, top-line business growth/scalability, operational sustainability and high performance and overall, strengthening his company’s role as a market leader. For over 20 years, Ilan has been executive business leader and innovative technology strategist for multinational real-estate and property development companies worldwide.
Sineesh Keshav is the Chief Technology Officer at Prologis. In this role, he oversees all aspects of the technology strategy and is responsible for leading the company’s global data and digital transformation. Since joining Prologis in 2018, Sineesh and his team have been focused on a capability driven, customer-centric approach to innovation and digitalization.
With over 24 years of experience in real estate, Kevin's expertise encompasses enterprise IT design, integration and ecological adaptation, helping his clients deriving ongoing value by improving their manageability, effectiveness and ongoing efficiencies. Prior to joining RealFoundations, Kevin served as a CIO for a large-NY owner operator and as a SVP of IT for an Ohio based REIT overseeing the strategic planning, enterprise architecture and information architectures.
Mike Salazar has extensive experience in consulting and sales with Enterprise companies, regarding strategic cross function technology, mainly focused on IoT and AI platforms. Named Star on the Rise by Security Industry Association in 2016, he is currently the Practice Director for Smart Buildings at HID Global. Through innovative solutions he helps organizations unlock value and realize business intelligence. Honored to call many of the most notable companies of our time happy customers.
Dharmendra is the Industry Principal at Yardi Systems. Dhar’s well-rounded and practical background in the industry includes experience as a software vendor, consultant and customer. Prior to Yardi Systems, he was the Vice President of Revenue Management and Analytics for Denver-based Apartment Investment and Management Co. (AIMCO), one of the largest multifamily REITs in the U.S., where he led the development and implementation of revenue management and business intelligence systems.
Malcolm Hobbs is VP of Marketing and Market Development at Join. Malcolm has extensive startup and enterprise marketing and business development experience in markets including SaaS, Industrial IoT, Analytics and Sustainability. At Join, he is helping to redefine how owners secure their buildings from digital threats and deliver advanced digital workplace services in today's tech-forward buildings.