The real estate industry is entering a new era, powered by artificial intelligence. While property managers are still early in exploring its full potential, the momentum is undeniable. In 2023 alone, venture capital poured over $29 billion into nearly 700 generative AI deals—more than triple the prior year’s activity, according to PitchBook.

Early AI applications are already quietly reshaping operations. Building management systems equipped with predictive AI can monitor HVAC units, optimize energy use, and notify staff about equipment issues, such as leaks, before they escalate. But the next wave of innovation promises even greater efficiency—not only in building performance but across the entire property management landscape.

Driving Smarter Decisions with AI

As AI capabilities expand, property managers expect meaningful cost savings and productivity gains. Machine learning is streamlining vendor management, maintenance scheduling, and tenant services. Industry experts project the global property management market to grow from $24.7 billion in 2023 to $36.4 billion by 2028, fueled in part by AI integration.

“AI is enabling us to generate insights we couldn’t have imagined before,” said Alec Humphries of C&W Services, which manages over 6 billion square feet of commercial space worldwide. These insights come from the ability to rapidly process and analyze massive volumes of operational data.

From Data to Action

Retail properties, in particular, generate a treasure trove of customer data—everything from foot traffic patterns to dwell times. According to BrightStreet Ventures’ Sanford Sigal, AI is helping translate that raw information into actionable intelligence. For example, analyzing security data could lead to smarter deployment of staff and surveillance to reduce retail theft, or guide investment decisions based on local crime trends.

Sigal compares this shift to past leaps in tech adoption: “There was a time when everything was done by hand. Then came Excel. Now, companies will either be AI-enabled or fall behind.”

Clean Data is Key

Despite the promise, AI’s success hinges on quality data. Machine learning algorithms require contextually relevant, structured information to deliver accurate results. That’s easier said than done. Older building systems often feed in fragmented, noisy data, creating challenges in isolating useful signals.

“It’s like being in a room where 30 people are talking at once,” said Sandeep Davé of CBRE. “AI needs to know which voice matters.” Standardizing and cleaning data across platforms and portfolios remains a major hurdle, often slowed by inconsistent vendor systems and disjointed databases.

Daniel Russo of JLLT emphasized that AI must be trained on real estate-specific scenarios to be effective. “Once it learns what matters, it becomes incredibly powerful,” he said.

Balancing Innovation with Security

As AI tools become more common, protecting data privacy and digital security is an increasing concern. Segmenting client data and structuring AI queries to avoid cross-account exposure are some of the safeguards firms are exploring. Meanwhile, cybersecurity threats are evolving as hackers turn to AI themselves, prompting firms to rethink both physical and digital protections.

Overcoming Human Challenges

Beyond tech, real estate firms face internal barriers to AI adoption—chiefly around training and organizational change. Employees may struggle to interpret AI-driven recommendations or worry about job displacement. Companies must invest in educating teams and managing the shift thoughtfully.

Also, amid the explosion of AI startups, some traditional software providers are rebranding old products with new buzzwords. Others push opaque, “black box” AI models that fail to explain how decisions are made—a critical flaw in trust-based industries like real estate.

“As with any major transformation, transparency matters,” said Sineesh Keshav of Prologis. “If we can’t explain why AI makes a certain decision—whether it’s about leases or lending—it won’t be sustainable.”

The Road Ahead

AI isn’t a silver bullet, but it’s fast becoming a strategic necessity in property management. Those who thoughtfully harness its capabilities—focusing on clean data, transparency, and user training—will be better positioned to adapt and thrive in a rapidly evolving market. For others, the risk isn’t just missing out on innovation—it’s falling behind entirely.

Source:  CPE