Few CRE companies have achieved their AI goals. Here’s why

The commercial real estate market has long been criticized for its slow adoption of modern technology, but it appears that the industry is finally starting to accelerate its use of artificial intelligence. According to a recent survey by JLL, companies are moving beyond the initial testing phase and are now exploring more targeted applications of AI to redefine value and drive business growth.

The survey, which polled over 1,500 senior commercial real estate investor and occupier decision-makers, found that 88% of investors, owners, and landlords have started piloting AI, with most pursuing an average of five use cases simultaneously. This represents a significant increase from just two years ago, when only 5% of companies were starting AI pilots. The adoption of AI is not limited to just investors, as over 90% of occupiers are also running corporate real estate AI pilots.

Challenges in Achieving Goals

Despite the rapid adoption of AI, many companies are still struggling to achieve their program goals. According to the survey, only 5% of respondents said they have achieved all their program goals, while close to half said they have achieved two to three goals. This suggests that much of the efforts are still experimental, and companies are not yet seeing the full benefits of AI.

According to Yao Morin, chief technology officer at JLL, the high number of adoptions is surprising, but the fact that only 5% of companies have achieved all their goals is not unexpected. Morin notes that companies are no longer just using AI for operational efficiencies, but are now tying it to their revenue goals, which requires significant changes to their operating models.

Investing in AI

Despite economic headwinds, companies are investing heavily in AI. More than half of investors surveyed by JLL have seen significant budget growth over the past two years, with the majority of spending going towards strategic advisory on technology or AI. Companies are also upgrading their cyber- and data-security measures and infrastructure to support AI integration.

Morin notes that what is surprising is that companies are not just using AI for simple tasks, but are instead focusing on using it to solve complex business problems and gain a competitive advantage. This suggests that the industry is moving beyond the initial skeptical phase and is now embracing AI as a key driver of business growth.

Future of AI in Commercial Real Estate

The future of AI in commercial real estate looks promising, with companies increasingly recognizing the potential benefits of the technology. As the industry continues to evolve, it is likely that we will see even more innovative applications of AI, from improving investment risk models to enhancing customer experiences. With its ability to drive business growth and improve operational efficiencies, AI is set to play a major role in shaping the future of the commercial real estate industry.