With all the recent headlines about ChatGPT and AI’s effect on businesses of all types, we were wondering what the bots themselves had to say about their takeover of commercial real estate. It reminds us of how Skynet took over humanity in the Terminator films.

We were impressed with the bot’s speed and grammar, but found the analysis limited in scope and not yet ready for our client-facing activities (see ChatGPT’s comments below in gold type). In its current iteration, ChatGPT’s free analysis needs a helping hand as its data set runs only through 2021. Its responses seem to ignore basic tenets of our industry, such as client relationships, which are obvious to humans.

We took the liberty of beefing up Chat GPT’s lackluster commentary with our own insights in black type. Our firm’s contention is that the winners going forward will be savvy humans who learn how to harness the power of AI to supplement their own expertise, problem solving skills and relationship-building acumen.

The Wall Street Journal recently reported that working with generative AI is like working with another astute human—a highly intelligent junior colleague. “And you can only do your best work as a team if you adapt to one another, learning to make the most of your respective strengths, and to mitigate one another’s weaknesses,” The Journal asserted. To make the most of your AI relationship, figure out where you need help, get specific, provide feedback, but remain skeptical, The Journal advised.

How AI and Chat GPT Are Revolutionizing Commercial Real Estate

As the world becomes increasingly digital, artificial intelligence (AI) and Chat GPT are rapidly transforming how the commercial real estate industry operates. From analyzing data to automating processes, these technologies are enhancing the efficiency and productivity of commercial real estate professionals. In this blog post, we'll explore how AI and Chat GPT are making the industry more efficient and their drawbacks.

Analyzing Data for Better Decision Making

One of the most significant impacts of AI and Chat GPT on the commercial real estate industry is their ability to process vast amounts of data quickly and accurately.​ Popular real estate blogger, Spencer Burton explained how to use ChatGPT to find and organize basic population data that is easily transferable to Excel files. Although the data is limited and dated, Burton said the potential is exciting as results will improve as data is added.

From where we sit, a partnership with a juggernaut data source like Costar can eliminate the need for searches and browsing for information. Further, it can allow for queries written into search bar that can yield comps, listings, and other data. Moreover, by analyzing data on building occupancy, rent rates, and market trends, AI algorithms can predict future demand and help real estate professionals make better-informed decisions. This can help investors identify potential opportunities and enable brokers to make data-driven recommendations to their clients.

Automating Processes to Save Time and Money

AI and Chat GPT can supplement certain processes, such as property valuations, marketing,​ lease negotiations and reviews. AI-powered tools can provide accurate property valuations quickly and at a lower cost than traditional methods,​ while a human understanding and perspective of the submarket and assets will remain essential in the brick-and-mortar business. AI can save time and money for both investors and brokers. ​ Similarly, Chat GPT can assist in negotiating lease terms by analyzing the language used in leases and [by] identifying areas where negotiations may be necessary. This reduces the time needed for brokers to review and negotiate leases manually.

ChatGPT can also create basic documents summarizing business terms such as LOI and memoranda of understanding that are used at the onset of transactions, again saving us time. Additionally, as noted in Costar’s recent article on ChatGPT, users have been using AI to draft marketing materials and property descriptions. And while the materials must be edited for tone and clarity, it is a great jumpstart and time saver for marketing staff.

Improving the Tenant Experience

AI and Chat GPT can also enhance the tenant experience in commercial real estate. Chat GPT-powered chatbots can provide tenants with 24/7 support and answer common questions quickly, reducing the workload for property managers. Additionally, AI can help property managers identify areas for improvement in their buildings, such as HVAC systems or lighting, to improve tenant comfort and reduce energy costs.

Limitations and Drawbacks

Despite the numerous benefits of AI and Chat GPT, they also have some limitations and drawbacks. One significant limitation is that these technologies are only as good as the data they're fed. If the data is inaccurate or incomplete, the results may be flawed. Additionally, AI and Chat GPT require significant investments in both time and money, which may be a barrier for smaller companies. Additionally, there are concerns about access to datasets, privacy and security, especially when it comes to the use of tenant data. McKinsey & Company expands on these concerns on a recent article, also highlighting that ChatGPT “sometimes hallucinates,” meaning it “confidently generates entirely inaccurate information.” I don’t know about you, but I have some concerns about a psychonaut as my assistant. If you’re old enough to remember Will Rogers and the Lost in Space series, you know what I mean, “Danger Will Robinson!”

Then of course there’s the big elephant in the room: Will AI replace jobs in our industry? And if so, how quickly? That’s still up for debate, although I tend to agree with a recent Real Deal report that said the technology will “even the playing field,” making information accessible to all. Thus relationships (not access to proprietary information) will become of further importance.

From my vantage point, multimillion dollar assets are on the line every day in our industry. We believe the human factor still carries significant weight.

As our bot colleague explained: “AI and Chat GPT are revolutionizing the commercial real estate industry by providing real estate professionals with powerful tools to analyze data, automate processes, and improve the tenant experience. While there are some limitations and drawbacks, the benefits of these technologies cannot be ignored.”​

Conclusion

We expect the technology to become increasingly important in improving productivity and efficiency, allowing service professionals to serve their clients and owner/investors better to glean further insights to improve operations and profitability.​ As the industry continues to embrace these technologies, we can expect to see even more innovation and disruption in the years to come.