Smart technology and real estate met a while ago, but the relationship hasn’t progressed to the extent that some insiders would like. On the positive side, smart buildings connect, analyze, and optimize performance, and are becoming more popular with building owners and developers. Brokers are increasingly starting to embrace the wider realm of proptech. But advances in artificial intelligence (AI) that have strongly influenced other industries haven’t made much of an impact on real estate yet. “AI in real estate is at Unit 1 Chapter 1,” says Guillaume Turcas, Affiliate Member with SIOR, managing partner of Faro Capital Partners in Paris, France.
He and other experts assessed the current state of smart-tech adoption in real estate, the prospects for future implementation, and the ways that the latest advances can promote efficiency and cost-savings.
CLIENT USE
Andy Westby, SIOR, president and managing broker at Goldmark Commercial Real Estate, Inc., in Fargo, N.D., reports that clients who prioritize efficiency and data-driven decision-making are gravitating toward proptech tools. Ra’eesa Motala, SIOR, president of Evoke Partners and CRO of Op2mize Energy in Chicago, says her clients share these priorities and are using proptech to streamline property management, enhance tenant experiences, optimize transactions, improve energy efficiency, offer virtual property tours, access real-time market insights, automate tasks, and guide decisions.
Other clients are less enthusiastic. According to Turcas, clients usually welcome proptech tools initially, but adoption brings with it complexities in compatibility with existing technology and systems, along with concerns about costs, security, and the ability of staff to use the tools properly. Rick Chatham, SIOR, associate at Lee & Associates in San Diego, Calif., says that the biggest area of resistance, understandably, is data privacy. As he points out, “We continue to see huge data breaches in the news. No one wants to be responsible for sensitive client data getting leaked.”
But privacy and security risks can be mitigated, and companies can invest in training for their employees. Meanwhile, those with tight budgets may change their perspective when they learn about the cost-savings proptech can bring. Motala offers the example of IoT devices in HVAC systems, which can cut energy waste by monitoring usage patterns. Consider Texas Tech, which installed energy management software in 2015 and has saved more than $2.5 million since. Another case study comes from proptech firm MRI Software, Texas Tech’s provider, which is saving approximately $26,000 per year by using its own data-capture and analytics tools in its London office.
There are qualitative considerations as well. Turcas emphasizes that proptech tools allow landlords to monitor tenants’ experience, noting that happy tenants are the source of steady income.
Proptech tools allow landlords to monitor tenants’ experience, noting that happy tenants are the source of steady income.
BROKER USE
Some brokers embrace proptech, while others prefer to stick with tradition. Westby, a proptech enthusiast, is an avid user of his firm’s proprietary data analytics platform, which tracks every property, sale, and lease in the local market. He and his colleagues have also tested out software for virtual property tours, digital tour books, and predictive analytics using AI. “These tools help us accelerate the leasing and sales process by streamlining property and market research, setting proper expectations, and negotiating successful transactions,” he comments, adding that the analytics help the firm optimize deals by identifying trends and market opportunities.
Chatham uses a wide range of proptech tools, such as ChatGPT, to rapidly create customized pitch decks. “Showing up with this kind of work already done gives me an instant advantage [over] a more experienced broker who is still doing things the old way [by] showing up, shooting the breeze, and then promising to send over some numbers in a few days,” he says. Once Chatham gets a listing, he can quickly generate an offering memorandum (OM) that his graphics expert can review and tweak, which saves him hours of time. He then uses AI to analyze various stages of the letter of intent (LOI) and compare them to the draft contract to ensure that nothing is missed.
Other AI advocates include Motala and Kostas Stoilas, SIOR, managing broker at Fortress Commercial Real Estate in Tampa, Fla. Stoilas uses AI to create graphics “on the fly,” review documents, summarize reports, and develop marketing descriptions. Evoke Partners, Motala’s firm, has developed a proprietary AI-based platform that allows end-users to manage and track their energy use and uses real-time automation. The platform also features an AI bot that can respond to questions and prompts.
Some brokers are less comfortable with AI. Stoilas attributes their hesitancy to the lack of centralized databases and application programming interfaces (APIs). As he explains, AI capabilities are closely linked to the quality and quantity of data.
Reliance on tradition presents another stumbling block. Chatham reports that annual surveys from the SIOR’s Technology & Innovation Committee show that some brokers are continuing to use old-school techniques like spreadsheets for CRM. “The gap between the haves and have-nots is getting greater, faster,” he contends.
Brokers who fail to adapt risk being left behind, while those who lean into these advancements will redefine what it means to succeed in this industry.
GETTING UP TO SPEED
Turcas expects that AI, and proptech in general, will profoundly modify the way brokers and their clients work. These tools, he predicts, will “take care of tier 2 and tier 3 tasks, enabling all real estate players to focus on the tier 1 stuff.” Brokers who don’t want to be left behind should heed Turcas’s advice to choose tools with strong track records and high levels of accuracy. Chatham offers another sound suggestion: “Whatever the tech is, rent it before you buy it, and really hold the vendors’ feet to the fire on free trials and refund policies.”
Turcas and Motala strongly recommend training by specialists. Motala adds that brokers should consider collaboration with tech providers and educate themselves and their clients through case studies.
Kasselman believes that some of the expressed fears might be overstated and that certain tariff and immigration proposals could be seen as negotiating leverage for the administration. He also feels that industry leaders will apply pressure on the administration to mitigate some of the potential fallout from the proposed policies.
Stoilas encourages exploration of AI, suggesting that brokers “play with it in a little sandbox and just see what it does. Then you’ll start realizing how it can grow with the data that you feed it.”
If you’re looking for AI-specific training, Chatham reminds SIORs that they can join a series of webinars on the practical implementation of AI, hosted by SIOR’s Technology & Innovation Committee. He also suggests that brokers spend the $20/month on the Pro version of ChatGPT.
However you plan to increase your comfort levels with proptech and AI, experts recommend that you start now. Westby states that tools like proptech, AI, and advanced market analytics “offer a significant opportunity to add value and deliver insights that clients cannot find on their own.” He concludes: “Brokers who fail to adapt risk being left behind, while those who lean into these advancements will redefine what it means to succeed in this industry.”
This article was sponsored by the SIOR Foundation - Promoting and sponsoring initiatives that educate, enhance, and expand the commercial real estate community. The SIOR Foundation is a 501(c)(3) not-forprofit organization. All contributions are tax deductible to the extent of the law.
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