How AI can address the skills gap in CRE

The emerging skills gap in the world of CRE

Finding people – especially good people with the right skills and experience – is no small task for many commercial real estate firms. Over the last few years, it’s become more challenging than ever.

Right now, labor shortages are affecting every major industry. In the US the number of available jobs continues to outpace the number of available workers with 9.6 million job openings compared to 6.4 million unemployed workers. Real estate-related jobs include tens of thousands of openings ranging from accounts and research assistants to property managers, mortgage brokers, and carpenters. To this effect, the Counselors of Real Estate recently ranked the labor shortage as one of the top 10 issues facing the commercial real estate industry.

Labor issues can be attributed to a variety of factors, including the “great resignation” and “quiet quitting” that occurred during and after the pandemic, fewer entry-level opportunities, competition from other industries, and an aging industry. In the wake of these labor challenges, AI is stepping into the breach as a much-needed tool that can be leveraged to help narrow industry skill gaps. According to a recent IBM report, 35% of global companies report using AI in their business, and an additional 42% are exploring AI.

Leveraging AI tools

People like to talk about AI as this shiny new thing. However, machine learning and artificial intelligence have been around for years. Think about it – before Alexa and Siri, we had Microsoft Clippy waiting at the corner of our screen to answer questions. Today's advanced generative AI tools and chatbots, however, offer a more sophisticated and – in some cases – "human" feeling interaction. This can be attributed to the large language models that drive these tools and, in turn, help to facilitate more useful and human-like responses. As it exists now, AI can make connections, recognize patterns, and process large amounts of data incredibly fast. Looking more closely at opportunities within the CRE industry, there are broad applications where AI can supplement (rather than supplant) existing workers. In fact, the application of AI technology is spreading rapidly across the CRE industry – from the custodian that no longer needs to take tenant phone calls, to property managers, leasing agents, technicians, and the entire chain of CRE industry participants.

Consider the need to regulate energy consumption and air quality within a large commercial building; one of the advances in energy efficiency is the use of things like sensors to turn off lights when people are not using a space. Leveraging AI technology, we can now measure and understand the relationship between the cost of energy, the energy delivered, and the quality of the air in order to optimize the energy expense for the building owner-operator, whilst also providing the best atmosphere for the people in the building. This level of technology eliminates the need for a technician to manually monitor a system and adjust equipment.

While OpenAI’s ChatGPT has captured no shortage of headlines and headspace in 2023, it’s important to note that image-generating tools like Midjourney and DALL-E have also taken the world by storm. In fact, some industry insiders suggest these tools can deliver a five-fold increase in architect productivity. The list of areas that can benefit from AI automation, software and tools include:

• Construction design and development

• Valuations

• Population analysis

• Financial modeling

• Forecasting / future of work planning

• Project management

• Property management

• Smart/sustainable building development

• Cost management, risk assessment, predictive analytics

• Lead generation

• Operations

• Marketing

• Research

• Employee relations, management, and efficiency

• Administrative assistance

Embracing the efficiency of AI

As the evolution of AI has accelerated rapidly over the last few years with tools like ChatGPT making AI more mainstream, there is one question (or fear) which seems to consistently push back on the advancement of this technology – will AI replace us in our jobs? Although machine learning and AI-powered tools will, inevitably, change the workforce, it’s important to recognize that AI is a tool, not an adversary.

This technology was developed to automate and simplify processes in a way that not only maximizes the effort of human workers, but also helps to address a growing skills gap in major industries. AI is not going to replace people who are doing things like leasing, writing contracts, and managing the financial flows within an operating building, but it can certainly supplement their work and significantly enhance productivity. Now, more than ever, there are countless opportunities to use AI as an efficiency tool that helps to offset the skills gap, such as automating manual tasks and allowing people to shift into other roles or take on more responsibilities within an organization.

Consider this – when ATMs were first introduced, people thought it would be hugely disruptive to banking… but that didn’t happen. Likewise, the rise of digital and mobile banking hasn’t eliminated the need for human bankers. What it has done is enhanced efficiency and, in turn, allowed bankers to focus on higher-level tasks and important interaction with customers. You still need people, but people can use AI to improve efficiency and accuracy within workflows. AI is the tool, but humans effectively leveraging that tool unlocks the true competitive advantage.

More acceleration ahead

The people that are going to do well in this period of technological disruption are those who are able to look at how they can take advantage of AI to enhance what they’re already doing, but better, faster and smarter.

The challenge at hand for CRE is not whether or not to use AI; but rather, how to use it effectively, as well as understand its limitations. Using an AI tool is like having a virtual assistant, an extra pair of hands to do the work, or an extra hard drive for your brain to process complex information. The other side of the equation is that it is important to go into AI with eyes wide open and understand its limitations. AI may be like having a second hard drive for your brain, but you still need to do a virus check on it. You must be able to ask the right questions to pull the right information and answers out of generative AI tools.

As people use it more, they will get better at it. Certainly, AI can’t bridge every skill gap within CRE; after all, you still need people to swing the hammer and hang drywall. However, AI has the potential to drive innovation that delivers efficiency in how manual labor is used, such as optimizing project management schedules, making sure you have the right people on a job site at the right times, or even designing projects so they can be built more efficiently in the future.

AI presents a unique opportunity to mitigate labor shortage problems with increased automation, advanced data analytics, and more. Resourcing and skill gaps are not an issue that’s going away in the CRE industry, and it’s one that AI can help to solve over time.