Just 5% of CRE companies have achieved their AI goals. Here's why

The commercial real estate (CRE) sector, long seen as slow to adopt new technologies, is now rapidly embracing artificial intelligence (AI). A recent survey conducted by JLL, which included over 1,500 senior decision-makers in the industry, highlights a significant shift as companies move from initial explorations to implementing targeted AI applications aimed at enhancing value. According to the findings, a remarkable 88% of investors, owners, and landlords have begun piloting AI initiatives, with an average of five different use cases being pursued concurrently. This surge in interest is further underscored by the fact that over 90% of occupiers are also engaged in AI pilot projects, a drastic increase from just 5% initiating such efforts two years prior. Despite this positive trend, the journey is not without its obstacles. Only 5% of respondents reported that they have successfully met all their AI program goals, while nearly half managed to achieve two to three of their objectives. Many of these initiatives remain in the experimental phase, lacking substantial growth. Yao Morin, JLL's chief technology officer, noted that the high adoption rates are surprising given the industry's historical skepticism towards technology. However, the struggle to meet goals is a common theme across various sectors. Companies are now redefining their AI objectives, moving beyond operational efficiencies to align AI initiatives with revenue growth. For instance, some organizations are using AI to refine their investment risk models, which necessitates a fundamental transformation in their operational strategies. Morin emphasized that true advancement will require companies to rethink their entire operating models rather than simply aiming for marginal savings. Investment in AI continues to grow, even amidst economic challenges. More than half of the investors surveyed reported significant budget increases over the past two years, primarily driven by their AI initiatives. The highest portion of these budgets is allocated to strategic advisory services related to technology and AI, followed by enhancements in cybersecurity and data security measures. Interestingly, JLL's survey revealed that companies are not just settling for low-risk, simple AI tasks. Instead, they are advancing toward more sophisticated applications aimed at gaining a competitive edge in tackling complex business challenges. This marks a significant evolution in how the commercial real estate industry approaches technology, positioning itself for a more innovative future.