The Future is Already Here – Jan. 13, 2025
The implementation of artificial intelligence (AI) has been on the radar screens of commercial real estate industry members in recent years, yet in a business that historically has been slow to adopt technology, it might seem as though AI implementation would happen sometime in the future rather than today. However, according to a survey from Ferguson Partners, the future is already here.
In a survey of 33 real estate investment firms representing both private and public organizations and varying in size, investment strategy and location, Ferguson Parners found that 84% of respondents are actively experimenting with or implementing AI. Specifically, 30% have already begun to implement AI in select business practices, and 24% of respondents reported experimenting with AI for personal productivity, with Microsoft Copilot listed as the most common AI tool of choice.
Outside of personal productivity, survey participants are exploring AI in CRM database analysis, tenant work orders, financial and accounting processes, leasing analysis, customer service/improved chatbots, rent and asset valuation predictive analytics, and lease administration.
Even as respondents allow employee use of AI tools, they continue to prefer serving as gatekeepers. Eighty-seven percent of the respondents allow their employees to use such tools, although the majority enforce restrictions around usage. Forty-eight percent of firms allowing AI usage enforce restrictions, particularly concerning data privacy and the use of public AI models like ChatGPT. Twelve percent of survey participants prohibit AI tools entirely in day-to-day operation.
Why add AI tools to daily workflows? All survey participants agreed that increased efficiency and productivity are the top motivation for incorporating AI into their organizations. Secondary motivations include cost reduction (67% of respondents), improved decision-making (61%), enhanced risk management (48%) and better customer service (39%).
Document abstraction is believed to be the business area with the greatest potential for AI impact, with 64% of respondents citing this area. Research, analytics and forecasting (52%) and communications and marketing (45%) represent the other likely uses for AI in the real estate industry.
Despite the high percentage of survey respondents who have introduced AI to their business processes, it remains a new frontier as far as workplace technology is concerned. When asked to identify the primary challenges they see in AI adoption, the lack of understanding of AI applications (67%) along with difficulty in demonstrating clear use cases or ROI (58%) were the most common responses from survey participants. They also cited factors including data quality and availability issues (58% of respondents), concerns over information security (52%) and lack of skilled talent (48%)
“The major takeaway from this survey is real estate professionals need to consider embracing AI to stay ahead of the curve,” said Justin Pellino, director, Ferguson Partners. “We expect AI use cases and ROI to continue to bubble up organically as commercial real estate firms test various tools. While data integrity and privacy are rightfully a concern, the most successful organizations are going to be those that draw boundaries early and encourage their teams to experiment with this technology.”
Naturally, AI adoption varies across different sectors of commercial real estate. Your organization may be way ahead of the curve when it comes to implementation, or it may still be in those initial exploratory stages. Regardless, as with the adoption of technological solutions generally, it won’t be long before the train has left the station.