4 Ways to Use AI in Commercial Real Estate

Introduction

Artificial intelligence (AI) is revolutionizing various industries, including commercial real estate (CRE). This article highlights four effective ways to incorporate AI into your commercial asset investing strategy, enabling you to be faster, better, and more efficient in your investment decisions.

Understanding AI

Before diving into its applications, it’s essential to understand what AI entails. Rather than focusing on formal definitions, think of AI as a powerful tool that can assist you in processing and analyzing vast amounts of data quickly. For instance, AI is the technology behind Siri on iPhones, Alexa on Amazon devices, and self-driving cars, transforming the way we interact with technology daily.

Why Use AI?

The primary benefit of AI in CRE is its capacity to provide a technological advantage over those who do not utilize it. The speed at which AI generates information is unmatched. For example, searching for a specific commercial real estate topic using traditional methods often results in sifting through multiple pages of search results. Comparatively, AI can compile relevant information in concise formats, saving valuable time.

Moreover, AI can help you solve complex problems, just like it helps in driving self-driving cars—making decisions based on real-time data analysis.

Four Ways to Leverage AI in Commercial Real Estate Investing

1. Market Research

AI tools can streamline your market research process. For example, using Google's AI platform, Bard, you can quickly assess which cities in California have the highest rent growth or the most new construction starts. Instead of spending hours on manual research, you can get comprehensive insights in just minutes by asking specific questions. Consider asking Bard:

• Which cities in California have the highest rent growth this year?
• Which cities in California have the most new construction starts?
• Which cities have negative rent growth this year?
• Which locations are experiencing job losses?

These inquiries will help you narrow down potential investment opportunities rapidly.

2. Investor Presentations

After identifying a promising investment, you can use AI to prepare professional investor presentations efficiently. By asking Bard to create a multifamily investor presentation or a script for pitching investors, you will save significant time and effort. Bard can generate a structured outline that includes introductory content, market benefits, case studies, and calls to action—all you need to do is customize the details.

3. Lease Agreement Clauses

If you already own a property and wish to maximize cash flow, AI can help. You can ask Bard to create specific lease agreement clauses, such as fees for garage storage or charging for water usage. While it’s essential to consult your attorney for legal validation, using Bard saves you the hours and costs typically associated with drafting leases.

4. Operational Efficiency

AI can also enhance your operational efficiency by providing insights into property management expenses. For instance, by asking Bard to create a list of typical multifamily expenses and their corresponding percentages, you can analyze and compare these costs against your property’s expenses to identify discrepancies and areas for improvement. Additionally, Bard can generate renovation cost tables to help assess potential upgrades economically.

Conclusion

AI in commercial real estate offers numerous benefits, from streamlining market research to optimizing operational efficiencies. The capabilities of AI like Bard are continually improving, providing real estate investors and operators with valuable insights that were previously challenging to obtain.

Keywords

AI, commercial real estate, investment, market research, investor presentations, lease agreements, operational efficiency

FAQ

Q: What is AI and how does it apply to commercial real estate?
A: AI refers to advanced computing technologies that analyze data and provide insights quickly. In CRE, AI can streamline processes such as market research and investment presentations.

Q: How can AI help with market research?
A: AI tools like Bard can answer specific queries about market conditions, such as rent growth and new developments, allowing you to make informed investment decisions quickly.

Q: Can AI assist in creating investor presentations?
A: Yes, AI can generate structured outlines for investor presentations, saving effort and ensuring a professional format.

Q: Is it safe to use AI for drafting legal documents?
A: While AI can help create lease clauses, it’s crucial to have a legal professional review these documents to ensure compliance and accuracy.

Q: How can AI improve operational efficiency in real estate?
A: AI can analyze property expenses and renovation costs, helping property managers optimize their operational budgets and make financially sound decisions.