Every day, we’re hearing of new types of artificial intelligence (AI). AI technology isn’t just impacting those who work in science and technology — it’s reaching just about every economic sector, and commercial real estate is no exception.
There are many ways commercial real estate investors, managers, and tenants can use AI to improve their workload, streamline their routines, and analyze data. Although new AI systems are constantly emerging, there are pros and drawbacks to consider when implementing AI in commercial real estate, which we’ll discuss below.
How AI Streamlines Commercial Property Management
Even though AI can take some time to learn, it’s worthwhile for investors and managers to understand tools and how they can use them. It can save time and labor costs and improve the tenant experience.
Automating routine tasks
Property managers have to deal with many tedious, routine tasks. They have to collect rent and follow up with tenants who are late paying rent. Then, there are the never-ending maintenance requests and tenant complaints. Handling these tasks can take an excessive amount of time, but luckily, AI tools can help with operational improvements.
Property managers can automate many tasks using AI, often with specific software that offers tailored solutions. For example, collecting rent might have been a labor-intensive process in the past, but now AI can alert tenants about upcoming payments, send receipts, and catalog received payments.
Optimizing the decision-making process
Investors, realtors, property managers, and tenants make multiple decisions in their day-to-day roles, some more challenging than others. However, using AI can help reduce the time devoted to these tough calls.
For example, AI can use data to help tenants find the best property for their needs. It can also help managers screen tenants to find ones with a good credit history and a solid income. AI data can assist investors by helping them find profitable opportunities and automate resource optimization- which means using AI to plan projects more efficiently and minimize management errors — to get them done with less cost.
Offering predictive analytics
Some people love researching market trends and analyzing historical data. But many dread this type of work. Now, with the help of AI algorithms, commercial property managers and investors can see future property forecasts with the click of a button.
This data can help managers decide on future moves, such as whether to renovate properties or adjust rents. AI can analyze data and propose potential next steps in a fraction of the time it could take for a person to do so manually.
Investors care about profit, and AI tools at an affordable price point can help lower expensive labor costs. Usually, investors have to pay property managers to take care of tenant needs, collect rents, and manage repairs. AI can speed up these tasks, which cuts down on the hours managers work, ultimately saving money for property owners.
AI can also minimize the risk of human error in tasks like data entry. However, there is a risk that AI can misconstrue its task and get things wrong, so having a human manager around for oversight is vital. This oversight will almost certainly take less time than the manager doing everything themselves, so there’s still plenty of time to be saved and reallocated to other priorities.
Benefits of Using AI in Commercial Real Estate
Many menial day-to-day responsibilities associated with property management can be automated by AI, , significantly improving a manager’s work day, saving time, and making a property run more efficiently.
AI can do many things, but it’s particularly helpful with data. Property managers can use AI to discover patterns, get insights, and make decisions quickly. For investors, data-driven AI tools are especially helpful because they can show data and projections for various commercial real estate investments.
Improved tenant experience
Most people who rent today prefer more technologically advanced management systems. It’s very convenient for tenants to submit work order requests and pay their rent using software instead of picking up the phone to make a request.
Reduction of costs
Although there might be an upfront investment to implement AI, it can reduce labor costs over the long term, which can mean fewer costs overall and more reliable profits for investors.
Potential high costs
Depending on your chosen AI software, you might have to make a big investment to buy it. Although some AI platforms are free to use or try, implementing a new AI system might come with a cost.
Data security issues
When you use AI to manage your data, you are liable for your tenant’s data security. When applying for apartments and renewing leases, your tenants will trust you with their social security numbers, credit files, bank account information, and more.
Although AI can streamline processes such as application management, rent collection, and more, sensitive data still requires secure oversight. Mismanaging that data could be a huge liability.
Because AI tools are new technology, investors who want to use AI must train their staff. Property managers and their teams will likely need to learn new skills to use AI tools effectively, which will take time.
Over-reliance on tools
Although artificial intelligence can help make some property management tasks faster and more streamlined, there is a risk that people can over-rely on tools.
For example, if AI software analyzes properties and suggests investments or specific tenants based on an algorithm, managers might be tempted to rely on the suggestions too much. In most cases, having people oversee the management process and question AI results will still be important. In other words, managers shouldn’t lose their jobs to AI anytime soon.
Taking the Next Steps With AI
Artificial intelligence has already had a big impact on our world today, including real estate management. Soon, more property managers and investors will adopt AI software to make their jobs easier.
It’s important to note that AI is still in its early stages. There continue to be challenges when using AI, including ensuring data remains private and using the new software efficiently.
However, AI has so much potential to improve commercial real estate management, and managers would be wise to be early adopters of all that AI has to offer.
Ben Mizes is the Co-Founder and CEO at Clever Real Estate, the nation’s leading real estate education platform for home buyers, sellers, and investors.