Supporting AI to Help Tenants Stay in Business
Current discussions beyond vendor hype about artificial intelligence in commercial real estate (as well as other industries) are frequently a collection of questions and concerns. For example:
- The Securities and Exchange Commission has said that AI washing — claims of AI capabilities that don’t exist — is an existing problem.
- States are gearing up to make AI regulation more complicated and confusing.
- Generative AI is getting bigger, faster, and worse, according to a research paper in the journal, Nature.
- An Apple research paper argued that large language models (LLMs) don’t mathematically reason, which is a problem when souped-up software is supposed to help perform complex analyses of deals.
But while such topics and others are important to the industry, they are also critical to many types of CRE tenants. Without the right support such as sufficient power, robust Internet access, physical design, and even digital security, some businesses will pass over such a facility.
Healthcare is a major example. In addressing the 2025 U.S. healthcare CRE outlook, CBRE pointed to AI as a critical factor “to address changes posed by strained resources and scarce labor.” The firm mentioned one application that transcribes patient-provider conversations and puts them into clinical documentation fields. Such technology could help reduce tight labor markets.
That will extend beyond support staff, technical staff, and nurses. Ten years ago, there were already systems that could allow a single anesthesiologist to monitor and control multiple colonoscopies. Similarly, a system at that time was able to perform multiple hair transplants under the direction of one surgeon.
Industrial tenants will increasingly need artificial intelligence to manage inventory, control physical picking, set delivery schedules, and even run self-driving vehicles that can move freight pallets about in a warehouse or even perform deliveries.
In its Global Machinery & Equipment Report 2024, Bain & Co. wrote that machinery and equipment makers can achieve productive gains of 30% to 50%, with 75% of executives in advanced manufacturing saying that adopting technologies like AI is a top priority in engineering and R&D.
AI-driven robotics will move into industries like retail, replacing many workers for routine activities in handling stock, taking inventory (already seen in groceries), and even food preparation in QSR locations that can’t afford to keep human staff for all jobs given cities and states expanding minimum wage legislation.
Over time, property owners that make tenant transitions to greater software and robotic automation will become more strongly competitive and a demanding market.
Source: GlobeSt/ALM