The Expanding Influence of AI on Commercial Real Estate

by Reco Real Estate Advisors

Artificial intelligence (AI) is rapidly reshaping industries worldwide, and commercial real estate (CRE) is no exception. From lease administration to building operations, AI is enhancing efficiency, accelerating decision-making, and uncovering new opportunities for owners, occupiers, and investors. According to a 2023 report from Fortune Business Insights, the proptech market is projected to grow from $34 billion in 2023 to $90 billion by 2032—an indicator of AI’s expanding influence across the built environment.

However, AI’s rise also brings challenges. Concerns around workforce displacement, ethical usage, and significant energy consumption are becoming more pronounced. Google, for example, reported a 48% increase in greenhouse gas emissions over the past five years due in part to AI model training and deployment. Even a single 100-word ChatGPT prompt requires substantial server power to process. Despite these concerns, AI continues to gain traction in CRE, transforming everything from design workflows to investment strategies.

Photo by Tara Winstead

How AI Is Transforming Occupier Solutions

Chris Zlocki, Global Head of Client Experience at Colliers, highlights AI’s growing impact on occupier services, including lease administration, facility management, portfolio strategy, and location intelligence.

Lease Administration

AI tools dramatically reduce processing time and streamline administrative tasks. At Colliers, AI-enabled platforms such as Colliers360 can complete workflows in minutes that once took five to seven days. In one instance, after a cyberattack disabled a client’s systems, AI extracted critical lease data—including rent schedules, payment deadlines, and terms—from screenshot images, ensuring uninterrupted payments across a national portfolio.

Portfolio Optimization

Colliers’ Portfolio AI evaluates entire real estate portfolios to identify cost-saving opportunities. In some cases, it has recommended strategic adjustments to as much as 40% of a client’s office space, helping organizations right-size footprints and improve efficiency.

Warehouse & Supply Chain

AI-driven forecasting tools are improving logistics planning, inventory management, route optimization, and risk mitigation—helping companies make informed decisions about space requirements and operational strategy.

Zlocki notes that responsible AI implementation requires accurate, transparent data, as well as emerging roles like AI ethicists to guide governance and usage frameworks.

AI in Building Design and Construction

Architects and designers are integrating AI to streamline project development and elevate creative output.

Accelerated Visualization

According to Michael Villegas of IA Interior Architects, AI reduces the time needed to produce high-quality 3D visualizations by roughly 30%, giving clients faster insight into design possibilities.

Iterative Design at Scale

AI tools—including ChatGPT, Midjourney, and Revit plug-ins—can generate hundreds of design variations in minutes. This automation replaces routine tasks and allows architects to focus on strategic design thinking and innovation.

Community Collaboration

AI can process stakeholder feedback and synthesize multiple viewpoints into design solutions. This capability was demonstrated in a public art initiative in Miami’s Little River neighborhood, where AI integrated community and client input to inform the final design direction.

Villegas emphasizes that AI enhances human expertise rather than replacing it: “The best outcomes come from the partnership between AI insights and human creativity.”

Optimizing Building Operations

AI-enabled building management systems are improving sustainability, operational efficiency, and tenant comfort.

Energy Efficiency

Platforms such as JLL’s Hank optimize HVAC and lighting systems using real-time weather and occupancy data, reducing energy costs by up to 20% or more.

Predictive Maintenance

Sensors and machine learning models anticipate equipment failures before they happen, enabling proactive maintenance and reducing downtime.

Improved Air Quality

Nome Capital Partners used AI-powered building systems to cut HVAC energy consumption by 45% while doubling the amount of fresh air circulated in a fully leased office building.

These advancements illustrate AI’s role in creating smarter, healthier, and more sustainable buildings.

AI’s Influence on Office Demand

While AI may not immediately shift lease rates or term structures, its broader impact on employment trends could shape future office demand. The International Monetary Fund estimates that up to 40% of global jobs involve tasks that can be augmented—or potentially automated—by AI.

Already, certain markets are experiencing AI-driven demand:

San Francisco: AI firms have leased 4.3 million square feet since 2022, including OpenAI’s 486,000-square-foot Mission Bay lease.
Industrial & Lab Space: Robotics, autonomous vehicle, and AI-powered biotech firms continue expanding footprints, boosting demand for specialized industrial and R&D facilities.

Still, uncertainty surrounding hybrid work adoption and ongoing tech layoffs make long-term impacts difficult to predict.

AI in Investment & Portfolio Management

On the investment side, AI is redefining how firms analyze markets and manage capital.

Advanced Analytics

Platforms such as JLL’s Capital Markets Quants evaluate millions of global property transactions to forecast market trends and identify strategic investment opportunities.

Enhanced Valuations & Decision-Making

AI-driven models help assess risk, predict performance, and optimize asset allocation—enabling faster and more informed investment decisions.

While the speed and precision of AI provide a distinct competitive advantage, they also introduce new risks in compliance, data privacy, and operational reliability. Strong governance frameworks will be crucial for long-term adoption.

The Road Ahead: Promise and Responsibility

AI in CRE remains in its early stages, but its benefits—faster insights, improved sustainability, operational efficiency, and more informed investing—are already reshaping the industry. What comes next will depend on ethical implementation, regulatory oversight, and thoughtful integration with human expertise.

As AI adoption expands, it has the potential to unlock meaningful improvements across the built environment while raising important questions about workforce impact, data stewardship, and environmental responsibility.