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October 2023

AI’s Power and Potential in Property Management

 

AI’s Power and Potential in Property Management

As the technology stacks of office property managers undergo a continuous process of evolution, artificial intelligence platforms have made their presence known. For their part, generative AI platforms such as ChatGPT are projected to have nearly 117 million users nationwide by 2025, nearly double the increase of smartphone users from 2007 to 2010, according to Insider Intelligence.

“This time-saving benefit allows property managers to focus on tasks that require their specialized expertise.” – Sarah Cannella – Director of Property Management, Hiffman National

Such platforms, and their associated uses and future potential for high-level decision-making, marketing, maintenance and tenant engagement have risen to the forefront of interest for office operations. Commercial Property Executive spoke with several veteran property management experts and got their insights on the best present uses for artificial intelligence, alongside its future potential.

Dialing in the day-to-day

When it comes to assisting in and, at times, replacing property management tasks done by humans, some low-hanging fruit has been adopting automation for more rudimentary operational tasks.

One area where property managers have started to enjoy using automation is lease administration, an often lengthy process tangled in a maze of numbers and legalese. Generative platforms, by way of their ability to rapidly extract, process and analyze information, expedite it considerably. “It [does it] to such a high level, where the review after getting those abstracts back is really brief, because they get it right most of the time,” explained Cary Fronstin, Partner & Director of Property Management at Foundry Commercial.

This time reduction has allowed property managers and brokers to enhance their relationships with tenants through the leasing process. For Sarah Cannella, Director of Property Management Operations at Hiffman National, automation allows for a renewed focus higher-level tasks such as accounting, analyzing the actual language of the lease terms, as well as devising and planning maintenance and repairs. Once the more time-consuming information extraction process is complete, “this time-saving benefit allows property managers to focus on tasks that require their specialized expertise,” Cannella told CPE.

Also in the realm of assistance is the platforms’ ability to nearly instantaneously respond to work order requests, particularly at times when on-stie managers may not be at a building. “We have automated workflow systems where tenants can go in, type in what their request is, and AI interprets that,” Fronstin noted.

On a day-to-day basis, the most common complaints that Foundry often receives in its office spaces are for temperature changes. Rather than gambling on a property manager sitting at their desk at the moment that a request is sent, the AI interpreter communicates directly with an HVAC engineer. “The days of having tenants call in a work order request to a manager that may or may not be sitting at a desk are not as frequent,” Fronstin reflected.

Hiffman uses a chatbot that functions along similar lines, and inputs work order tickets directly into the management team’s systems. Cannella sees an added benefit in the bot’s accessible nature, unencumbered by oftentimes cumbersome work order software. “These tenants, often working on the warehouse floor and not at a desk, appreciate the convenience of texting the chatbot without the need to remember a username or password,” she explained.

A marketing assistant
Alongside a significant facilitation in both saving time and interacting with present tenants at a property, automation is playing an ever-more important role attracting and retaining high-quality leases. Beyond the chatbots that often greet every visitor to an office property’s website, the platforms also have the ability to generate useful marketing content.

Fronstin has observed a niche for the platforms in presenting virtual space plans to prospective tenants, particularly at older office assets that may be struggling with occupancy amid a widespread flight to Class A, amenity-driven spaces in gateway markets.

Here, a virtual space planner transforms the less modern space into more modern, redesigned office. “It’s marketing gold,” Fronstin explained. “It allows tenants to see things that they may not be able to visualize [by] themselves, and actually lease up a space that they may not have considered,” he added.

Decision-making potential

In the same vein that property managers benefit from the platforms’ versatility for lower-level tasks, they also recognize its strategic value. For Ilene Goldine, chief digital strategy officer at Hines, much of the platforms’ potential comes by way of their ability to derive insights from data and inform strategic decision-making. “What are the insights that they are telling you that you can’t see with the naked eye?” Goldfine asked. Such a question applies not only to diagnostics, but to the aforementioned tasks.

Justin Segal, President at Boxer Property, has observed such a trend particularly in the realm of predictive analytics for many aspects of a given office property. “If an organization has good metadata and historical transactional data, then AI can be used to predict outcomes based on past performances, and the outcomes that you can predict are anywhere you have structured data,” Segal detailed. Noteworthy examples that Segal listed were for predicting the likelihood that a tenant will renew a lease at a given price, or the extent of customer satisfaction with a program at a property.

Acting as a de facto decision maker, the platforms’ ability to analyze data also translates into decisions of interpersonal interaction “We use them to determine which customers to talk to, and out of eight [thousand] tenants, the ability to focus on three or four is extraordinarily helpful,” Segal detailed.

In this realm, there is a hybrid of humans and robots, working together to produce the best outcomes for a property. “At the end of the day, that level of experience that somebody could be bringing is encapsulated in a system now, and that system will handle the predictive and data management tasks in deciding where to go have a conversation or intervene,” Segal said.

With all of this in mind, property managers must keep in mind automation’s limitations, as well as the importance of proper data collection and hygiene. Both are paramount, given the fact that these platforms are incapable of synthesizing data by themselves, as well as their susceptibility to internal and implicit biases. One study from datanami quoted Peter Relan, a co-founder & chairman at Got It AI, a developer of enterprise-focused chatbots, as citing a 15 to 20 percent hallucination rate for generative platforms such as ChatGPT. “They’re only as good as people updating them and keeping them relevant,” Goldfine cautioned. “If [you] don’t put more information in, then that is stale information that you are basing those decisions on. This is all based on good foundational data,” Goldfine concluded.

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About NAI Hiffman:

NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.

About Hiffman National:

Hiffman National is one of the US’s largest independent commercial real estate property management firms, providing institutional and private clients exceptional customized solutions for property management, project management, property accounting, lease administration, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally bestowed Top Workplace, and recognized CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 250 employees nationally and an additional six hub locations and 25 satellite offices across North America.

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