Last month, VTS set out for Chicago to attend MRI Ascend, a multi-day conference of learning, sharing best practices, and innovating in the CRE space. In addition to our booth in the expo hall, this year, our Chief Product Officer, Gijo Mathew, gave a thought-provoking talk on AI, real-time data, and human-centric decision-making. And to wrap up the conference, we received the 2023 Customer Impact Partner of the Year award.
Read on to learn more about the key takeaways from the event, as well as our predictions for what it’ll mean for the year to come.
Emerging Technologies
If you’ve kept up with the news over the last year, you’ll know that AI is everywhere. ChatGPT first came on the scene last November, and since then, it’s been nearly impossible to go a day without hearing about LLMs and generative artificial intelligence. And in the commercial real estate industry, it is no different. Most companies, large or small, have already adopted some type of AI solution and are committed to incorporating it into their digital strategies going forward.
AI is revolutionizing the way people live and work. New advancements on the administrative side are freeing up leasing and asset managers so they can focus on the strategic decision making that matters most. Using generative AI for marketing needs, like copywriting social posts, blogs, or listings, can reduce mundane daily activities and better maximize human effort. And data management and large scale financial modeling can be done, at least partly, with the help of AI.
However, one common theme at MRI Ascend, and a sentiment widely shared throughout the rest of the industry and beyond, is the importance of exercising caution towards AI as the technology continues to progress. VTS CPO Gijo Mathew shared this concept in his session, “If These Walls and Streets Could Talk: A Conversation about Real-Time Data.” He explained how AI is a great tool, but it’s just that, a tool. Artificial Intelligence isn’t going to solve your business’s most challenging issues, create process efficiencies, and make real-time calculated inferences on its own. It is nowhere near the point of replacing human decision makers.
Perhaps what’s more important than racing to adopt the latest AI solutions you can get your hands on, is evaluating what your business actually needs and evaluating how AI can help with that. And that’s going to look different for every business. There is no one-size-fits-all solution to the great AI race, but having a conversation with real humans is a great place to start.
Data Management
In 2023, you’ll be hard pressed to find any company making decisions not based on data. And that’s for good reason. There are millions and millions of data points out there to leverage in your strategic business decisions. And it’s easier than ever to understand tenant sentiment and engagement and to make sense of those data points, right? Sort of… CEO of MRI, Patrick Ghilani, explained this concept during the day one keynote.
Data is only as good as our understanding of it. With millions of data points out there living on disconnected and siloed systems, making intelligent and meaningful decisions with that data is complicated. And the more systems you invest in, and the more technology you adopt, the more complex those decisions become. In 2024, for many businesses to be successful, a back-to-basics approach with data cleanup and tech stack consolidation is going to be key.
Consolidated platforms that take the silos out of your organization and promote visibility and transparency across teams is going to be key in this effort. But data management goes beyond efficiency. Data security has become one of the top concerns for businesses as we head into 2024. With the continuous advancements in artificial intelligence, new security threats have emerged, making it essential to protect not only your business’s data but also your clients' with heightened vigilance. The rise of fraud, phishing, and security breaches underscores this critical need for a robust cybersecurity foundation.
In a rapidly evolving world, mastering data management, staying proactive, and remaining sharp will be pivotal for businesses to thrive. Staying proactive will not only safeguard your organization against potential threats but also will foster trust among your clients, who can be assured that their data is in safe hands. With data serving as the lifeblood of modern business operations, prioritizing both its efficient management and comprehensive security is a non-negotiable step toward success.
Economic Factors
As we head into 2024, it’s apparent that the real estate market will likely never look as it had before as many jobs have remained hybrid or fully remote, interest rates are still the highest in recent memory, and inflation is descending ever so slowly. Additionally, with loan maturities soon coming due and many commercial leases set to expire and significantly downsize, leasing and asset managers have their work cut out for them.
The good news is that it seems the worst of inflation is behind us, and rent is stabilizing nationwide. This stabilization is offering a glimmer of hope for the commercial real estate sector, as it suggests a more predictable and less volatile market ahead. However, there's no denying that the landscape has shifted, and the real estate industry must adapt to this new normal.
While office demand is down from historical averages, other sectors are outperforming, with retail leading the charge. Strip mall traffic is up 18% compared to pre-pandemic levels, indicating that consumer habits have evolved and that businesses are adjusting accordingly. This shift presents opportunities for investors and developers to reimagine and repurpose underperforming office spaces into vibrant retail or mixed-use environments that cater to the changing needs of communities.
Multifamily continues to be top of mind for owners and operators with new headlines every day about shifting investments toward multifamily, surges in supply, and converting vacant office buildings for multifamily use. The Biden administration recently announced a plan to accelerate this conversion process, with $35B in below-market loans. While government support of office to multifamily conversions is a positive signal, the logistical challenges of conversion are profound, with less than 1% of multifamily deliveries over the past two decades coming from office conversions. Resident expectations in existing buildings continue to evolve, with owners and operators looking to differentiate their building and experience to attract and retain amid a competitive market. As we move forward, the commercial real estate industry must continue to innovate and adapt to meet the evolving demands of a post-pandemic world.
Looking Forward
Commercial real estate is undergoing its digital transformation as we speak. And as the landscape becomes more complex with emerging technology like generative artificial intelligence, it is essential for businesses to stay sharp in their evaluation strategies. AI is only as good as the data that’s fueling it, and without a strategy to clean up, organize, and analyze your most critical client data, it’s futile.
As we head into the future, it’s essential to be thoughtful about your current tech stack, the solutions you intend to implement, and the reasons why you need them in the first place. AI is an exceptional tool that’s revolutionizing the way people work and will likely shape the future of our lives. And that’s why we need humans now, more than ever, to be a part of these strategic decisions.
