Private enterprise that fails to strategize growth is likely to decline and be usurped by more deliberate competitors. Governments that introduce new policies without ensuring there are enough staff or resources to uphold them won’t be able to put them into practice. Faced with the imperative to run lean but remain agile, many organizations are seeking ways to integrate digital tools powered by generative AI into their workflows to innovate and help alleviate accumulated organizational debt.
A 2023 report by McKinsey posits that generative AI could annually create $110 billion to $180 billion or more in value for the real estate industry, and that real estate companies could gain in excess of 10 percent or more in net operating income (NOI) through more efficient operating models, stronger customer experience, tenant retention, new revenue streams, and smarter asset selection. Overall, the highest-impact functions for generative AI are in sales, marketing, product R&D, software engineering, corporate IT, and customer operations.
On the ground, there’s great diversity in the ways that generative AI is being used in the real estate industry to improve both operations and service offerings:
Planning and design firms such as boutique consultancy UrbanistAI use generative AI in participatory planning and design processes to ideate on property development outcomes, sometimes with input as minimal as site photos. Leveraging generative AI for this purpose allows firms, whether large or small, to save time and resources that would ordinarily be allocated to developing representation materials while enhancing the quality of deliverables.
In the domain of real estate brokerage, Compass employs generative AI to create compelling and informative property descriptions. Compass’s AI-driven services enable generation of listing descriptions, assist with content creation for social media posts, and support other client-facing communications, thus allowing agents to focus on other priorities that require more human intervention, such as client service and deal closing.
Global professional services firm Deloitte streamlines and enhances business operations by automating stages of contract management, such as creation, risk evaluation, and negotiation to improve the ordinarily onerous process of contract management. Applying generative AI to contract management processes can accelerate contract creation and analysis, resulting in time and cost savings for legal teams and others involved in real estate transactions.
The software development term technical debt describes the cost of additional rework caused by choosing an easy, limited solution immediately instead of a better approach that would take longer. There are many other names for technical debt, including the sector-agnostic term organizational debt, but semantics aside, this accumulated, unmanaged debt, borne by most organizations, poses a barrier to growth and innovation and can impose often unquantified burdens. With generative AI potentially boosting worker performance by up to 40 percent, organizations are enticed to integrate and scale this technology to maximize its benefits and pay down accumulated organizational debt in all of its forms.
As discussed in the previous article of this series on generative AI in real estate practice, uptake of generative AI within an organization doesn’t always manifest as bespoke, polished, and proprietary utilities developed with massive caches of organizational data and significant investment of resources. Organizations may purchase subscriptions to services; employees may use personal LLM-powered services, such as Bard or ChatGPT, or AI assistant services such as Otter or ClickUp; and both may develop their own personal models run on local servers to enhance workflows.
Before investing in development of bespoke tools or purchasing subscription software, however, organizations can (and should) assess readiness and strategize uptake of generative AI technology.
The following questionnaire may help you gauge your organization’s readiness for adoption of new generative AI tools. It is based on criteria used to assess readiness for digital transformation and informed by common roadblocks to implementation of generative AI specifically.
In general, generative AI has been acknowledged to help expedite repetitive and formulaic administrative tasks, as well as to assist with technical tasks such as reasoning and research. Professional organizations in the real estate industry, such as the American Planning Association and the National Association of Realtors, have also acknowledged the role generative AI can play in increasing efficiency and productivity. These organizations also impress upon members that using generative AI carries inherent risks, including ethical and legal concerns that range from algorithmic bias to infringement of intellectual property rights.
When generative AI is used to create content or designs, the rights and ownership to generated content depend on the terms of service of the AI platform, and on prevailing legal doctrine. This aspect of the technology becomes especially important when AI-generated content intentionally or unintentionally includes elements from copyrighted media. Although some AI providers may provide legal support in case of disputes, users of generative AI technology should exercise caution when using outputs that incorporate images or text.
One precautionary exercise that can be valuable when using generative AI is to weigh the risk versus the reward by asking yourself two questions:
1. Does the benefit from use of this output outweigh potential losses stemming from conflict? And if so, to what degree?
2. Does use potentially expose you to losses stemming from claims for violations of the law or ethical rules?
In addition to considering risks and rewards, it’s also advisable to attribute work derived from AI platforms, particularly when the outputs emulate the work of others. Ethical considerations should not be overlooked, so the ethical guidelines of the appropriate professional organizations should also guide decision-making.
When implemented carefully, generative AI holds promise for improving operations and products within the real estate industry in ways that have already been realized, as well as in emergent ways.
