How the Real Estate Industry Is Embracing Artificial Intelligence

Industry leaders at the third annual State of the Commercial Real Estate Market event recently discussed the integration of artificial intelligence within the sector, emphasizing its role in driving operational efficiency. While AI tools are being adopted to automate data-heavy tasks like accounting and reporting, experts maintain that the industry remains fundamentally rooted in human relationships and bespoke decision-making. This shift highlights a growing trend where commercial real estate firms leverage technology to aggregate proprietary data and enhance investment performance without replacing the essential human element.

During a panel discussion at Babson Boston, executives from AEW Capital Management, Alliance Global Advisors, and Greatland Realty Partners explored the balance between technological advancement and the relationship-driven nature of commercial real estate. Jon Martin, CEO of AEW Capital Management, noted that while AI creates significant efficiencies and time savings, the bespoke nature of the asset class ensures that individual decisions and local market knowledge remain the primary drivers of portfolio growth. Erin Degnan Escobedo, faculty director of the TARCO Institute for Real Estate and Entrepreneurship, reinforced this sentiment, describing real estate as a tangible industry where relationships shape market opportunities.

Practical applications of AI are already yielding measurable results for firms like Greatland Realty Partners. Co-founder Phil Dorman shared that his company is utilizing AI to overhaul accounting and monthly reporting systems, aiming to reduce the 1,000 man-hours currently spent each month on data preparation for eight investments and five limited partners by 90%. Dorman characterized AI as a tool that helps bring human ideas to life faster rather than a job destroyer, suggesting that the technology's value lies in accelerating innovation and process creation.

Leah Dillon, COO of Alliance Global Advisors, highlighted the importance of using AI to unlock the value of proprietary data that many firms currently leave on the table. By auditing systems to eliminate redundancies and gaps, firms can better aggregate and analyze data to project trends, save costs, and drive performance for investors. The discussion took place against the backdrop of the newly launched TARCO Institute at Babson College, which aims to bridge the gap between real estate entrepreneurship and industry practice, ensuring that AI remains a central theme in both professional and academic real estate circles.