The AI boom is changing the way business is done in the United States. It’s no surprise, then, that developers, investors and occupiers say that artificial intelligence will transform commercial real estate, too.
AI is still in its early stages, and commercial real estate companies, developers and brokers are still learning how to use this tech to boost their bottom lines. But a new survey says that CRE firms are far from hesitant to embrace this tech.
In JLL’s 2023 Global Real Estate Technology Survey, respondents ranked AI and generative AI among the top three technologies expected to have the greatest impact on real estate during the next three years.
But what does that mean?
First, expect companies working in the artificial intelligence space to rank among the biggest users of commercial real estate.
According to JLL’s report, AI companies are expected to need 1.6 million square feet of commercial real estate space by the end of this year in the United States.
The United States is a hotspot for AI companies already, with JLL reporting that 37% of these companies are currently based here.
The report also points to the rapid growth this business is experiencing, with JLL citing data from PitchBook saying that the market for generative AI — AI that is used to generate content — will hit $42.6 billion this year. The market is expected to grow to $98.1 billion by 2026.
Of course, not all markets are equally strong. JLL reports that existing AI companies are clustered in the San Francisco Bay area, with 42% of these firms doing business from this region. Other busy hubs for AI companies include Boston, Seattle and New York City.
JLL’s research found, too, that there is rising demand for AI talent. According to JLL’s report, postings for AI jobs increased by more than 250% since the beginning of 2021.
Because generative AI relies upon extensive computing power, these companies need more power, cooling facilities and data centers. Not surprisingly, then, JLL predicts strong growth for the global colocation data center market, too.
According to JLL, the global colocation data center market is forecast to grow at 11.3% a year from 2021 to 2026. The hyperscale data center market is expected to grow at an even faster pace at about 20% a year.
In good news for the industry, commercial real estate professionals aren’t as hesitant to embrace new technology — including AI — as they once were. According to JLL’s Global Real Estate Technology Survey, more than 80% of real estate occupiers, investors and developers say that they plan to increase their real estate technology budget in the next three years.
That provides hope that CRE professionals and companies will use AI to help boost their marketing and sales efforts. Globally, more than 500 companies are providing AI-powered services to real estate companies.
How are real estate firms using AI? JLL points to several examples, including document sorting and data standardization; data mining for automated facility management; price modeling and prediction for investment management; satellite image processing for asset valuation and risk management; reality capture for construction site monitoring; and scheduling for construction and capital markets.
