The Expanding Influence of AI on Commercial Real Estate

by Reco Real Estate Advisors

Artificial intelligence (AI) is reshaping industries across the globe, and commercial real estate (CRE) is no exception. From lease management to building operations, AI is helping companies improve efficiency, streamline decision-making, and uncover opportunities that were previously difficult to identify. According to a 2023 report from Fortune Business Insights, the proptech market is expected to grow from $34 billion in 2023 to $90 billion by 2032.

While AI offers enormous potential, it also raises concerns around workforce displacement, energy consumption, and ethical use. For example, Google’s greenhouse gas emissions increased by 48% over the past five years due to AI integration, and even a single 100-word ChatGPT prompt can require significant server energy to process. Despite these challenges, AI is increasingly being adopted across CRE, influencing everything from building design to investment strategies.

Photo by Tara Winstead

How AI Is Transforming Occupier Solutions

Chris Zlocki, Head of Client Experience at Colliers, notes that AI is already revolutionizing occupier services such as lease administration, facility management, portfolio strategy, location intelligence, and project management.

Lease Administration: Tasks that previously took five to seven days can now be completed in minutes. Colliers’ AI-powered platforms, like Colliers360, streamline data processing and reduce redundancy. For instance, after a cyberattack disabled a client’s system, AI extracted critical lease and rent payment data from screenshots of documents, ensuring no payments were missed across a nationwide portfolio.
Portfolio Optimization: Colliers’ Portfolio AI evaluates real estate portfolios to identify opportunities for cost savings and operational improvements, sometimes recommending adjustments to 40% of a client’s office footprint.
Warehouse & Supply Chain: AI is increasingly used for demand forecasting, logistics, risk management, and route optimization, helping companies make better space and resource decisions.

Zlocki emphasizes that AI’s potential can only be fully realized when data is accurate, transparent, and shared responsibly across organizations. New roles like AI ethicists are emerging to guide responsible implementation.

AI in Building Design and Construction

Architects and designers are leveraging AI to accelerate and enhance project development:

Faster Visualization: Michael Villegas of IA Interior Architects explains that AI reduces the time required to produce high-quality 3D renderings by roughly 30%, allowing clients to visualize design options earlier in the process.
Iterative Design: AI tools such as ChatGPT, Midjourney, and AI plug-ins for Autodesk Revit enable architects to generate hundreds of design solutions in minutes. This replaces repetitive tasks, freeing designers to focus on creativity and problem-solving.
Community Collaboration: AI can integrate feedback from multiple stakeholders, producing design outputs that reflect both client vision and community values, as seen in a public art project in Miami’s Little River neighborhood.

Villegas emphasizes: “AI complements human expertise—it doesn’t replace it. The best results come from a partnership between AI insights and human creativity.”

Supporting Building Operations

AI-driven building management systems are optimizing energy use and sustainability:

Energy Efficiency: Platforms like JLL’s Hank adjust HVAC and lighting systems based on real-time climate data, reducing energy costs by up to 20% or more.
Predictive Maintenance: IoT sensors combined with AI can identify maintenance needs before failures occur, making buildings more proactive rather than reactive.
Indoor Air Quality: Nome Capital Partners achieved a 45% reduction in HVAC energy consumption and doubled fresh air circulation in a fully leased office building using AI-powered systems.

These tools highlight how AI improves building operations, sustainability, and tenant satisfaction.

AI’s Potential Impact on Office Space Demand

While AI may not immediately alter lease rates or office term lengths, it could influence employment trends, which in turn affect space demand. The International Monetary Fund estimates that up to 40% of global jobs involve tasks that can be augmented or automated by AI.

Some sectors, like tech, are already experiencing growth in office space due to AI:

San Francisco: AI companies have leased 4.3 million square feet since 2022, including OpenAI’s 486,000-square-foot lease in Mission Bay.
Industrial & Lab Space: Robotics, autonomous vehicle, and AI drug discovery firms are also expanding, reflecting AI’s impact beyond traditional office markets.

However, tech layoffs and ongoing uncertainty around remote and hybrid work mean the broader effect on office occupancy remains uncertain.

Photo by Mister Mister

AI in Investment and Portfolio Management

AI is also changing how CRE investors make decisions:

Market & Asset Analytics: AI platforms, such as JLL’s Capital Markets Quants, analyze millions of global property transactions to forecast trends and identify opportunities.
Enhanced Valuations: Predictive algorithms help investors assess risk, optimize portfolios, and make high-volume investment decisions with greater confidence.

The technology’s speed and accuracy provide a competitive edge, though it also introduces new risks in data privacy, compliance, and operational reliability. Clear transparency and governance are essential for successful implementation.

Early Promise and Ongoing Questions

AI is still in the early stages in CRE, but its ability to process data quickly and provide actionable insights is already transforming the industry. Future success will depend on ethical implementation, regulatory frameworks, and careful integration with human expertise.

As AI adoption continues, it promises to improve efficiency, sustainability, and investment performance, while raising important questions about workforce impact and societal responsibility.

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