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AI is Real Estate’s Secret Weapon for Efficiency, Accuracy and Customer Satisfaction

In this special guest feature, Nick Vandivere, CEO of ThoughtTrace, discusses how AI is real estate’s secret weapon for efficiency, accuracy and customer satisfaction. During his tenure, Nick has led the transformation of ThoughtTrace into a company that is a technology and thought leader for the application of applied artificial intelligence and machine learning. As a software CEO, Nick believes that product innovation, reliability, and an outstanding user experience are the required ingredients for exceptional performance and long term value. Nick holds a Bachelor of Science degree in Economics from Texas A&M University.

Technology, specifically artificial intelligence, has seamlessly become part of the fabric of our everyday life. From life-saving healthcare applications that predict the evolution of diseases and viruses to autonomous vehicle crash detection systems made standard in many vehicles, AI has the ability to impact life and industries across the board, and commercial real estate is no exception.

On the building management side, AI can automate various maintenance tasks and schedules. It can aid the remote control of various processes like demand generation, equipment predictive analytics, facility cleaning needs, and more. This leads to opportunities to reduce expenses and increase tenant satisfaction. For the transaction marketing side of real estate, AI platforms can streamline marketing campaigns, track proposals and create instant feedback and transparency between owners and brokers which expedite lease up and drive NOI. On the valuation side, AI can even take an algorithmic approach to find property values by correlating market statistics, property characteristics, natural disaster risks and other metrics into intelligent, data-driven assessments. Some ownerships have even enhanced communication by creating tenant portals to help cultivate a supportive and responsive tenant experience.

After years of being slow to adapt, the commercial real estate industry has finally embraced technology and the efficiencies it provides. But now it’s time for commercial real estate professionals to level up their decision making with deeper and exponentially faster data delivery. One such emerging opportunity for AI is Document Intelligence, which holds the potential to provide all stakeholders with multiple benefits including streamlined processes,  structured data for robust reporting and analytics, and thought-based full text searches completed in seconds rather than days or weeks. Document Intelligence through AI is an area of the industry ripe for disruption, one that has historically required significant capital and human investment; artificial intelligence and machine learning is changing that!

Persistent Document Management Challenges

Any seasoned real estate expert understands the difficulties inherent in managing the high volume of supporting documents involved in a transaction. These transactions involve a myriad of complex documents that govern multiple rights and obligations including purchase and sales contracts, commercial leases, addendums, amendments, estoppels, work letters, and insurance binders, to name a few.

For example, in addition to the basic lease terms, a commercial tenant might have obligations or options regarding their ability to expand or contract their space, whether or not they have a right to renew, terminate, or even sublease and if so, what are the determining factors for those rights. Additionally, many organizations must provide continuity to the system of record for the documents, yet the source of truth, is often stored in a separate environment that doesn’t automatically update the application. This creates data disparity.

Companies often hire a third party to perform the lease abstracts they depend on and then manually input data into accounting and property management software, creating challenges due to the volume and complexity of supporting documents and the likelihood that manual entry will result in errors and/or omissions. The problem is, there often is not a single digital location that houses all contracts and data with the capability to seamlessly find and uncover the ever-changing information. 

The current state of real estate data creates information silos on both the broker and owner side. And these silos are detrimental to operating efficiencies. Consider a shopping center property manager who spent 10 years on the job and then decides to leave. That manager holds years of operating history in their head. They understand the tenants, the various obligations and the peculiarities of each lease. When they leave, much of the information goes with them, unless the organization had in place a sophisticated AI platform that combines the relevant data into a centralized location. Armed with this technology, the incoming property manager would be able to better understand and fulfill the related obligations on day one.

Most platforms that offer AI simply provide document management to address these basic challenges and complexities. However, they don’t go far enough into the content to extract meaning and develop a full understanding of the data. Basic AI platforms focus on simply organizing content, in contrast to understanding the content of those documents. Without the ability to dive deeper, real estate owners, managers, and occupiers will continue to struggle to review contractual data and truly understand the risks and opportunities contained within their documents. The industry needs a different type of AI platform that employs a data unification approach with searchable content and information that creates accurate predictions and ultimately drives decisions.  

Extracting Value from Documents

Advanced technologies, when used properly, can search, merge, rearrange and allow for the quick and accurate extraction of pertinent information.

When documents are combined and collected in one secure place, it becomes simple to export the information and integrate it to other apps. Real estate providers can set permission levels for data access, track what users are reviewing, and restrict unnecessary content viewing. For example, a landlord might share information with a contractor regarding their tenant improvement obligations, but will want to leave out specific deal points that are deemed confidential, or they might just want to extract the compliance language for the insurer of a portfolio, leaving out the other non-essential details.

For legal compliance and auditing, AI’s organization prowess enables users to account for leases on the books, by determining if they’re technically leases or obligations. It also enables critical data tracking for expansions, lease tracking and other events. Top-tier AI providers offer advanced, domain-specific AI solutions with data extraction that can integrate with other platforms and even create calendar invites or Slack reminders based on critical dates. And the platform pulls in the source document data because that’s where the details and value reside.

On the mergers and acquisitions side, AI simplifies and expedites the due diligence process. With the swelling appetite for M&A, firms have increasing pressure to dig deeper and faster to gain insight in respect to what’s contained in the related documents. An AI-Powered Solution allows for increased efficiencies and accuracy as searches can now scour an entire portfolio, instead of analyst pouring through documents manually and missing key details.

Making Data-Driven Decisions

When real estate firms transform their documents with AI, documents become an asset instead of a liability or obligation.

There are thousands of data elements in real estate agreements and powerful AI platforms can read, interpret, and understand them in seconds, oftentimes more accurately than a person would. With automatic extraction, a business can gain insights and make profitable decisions, which can result in the savings of millions of dollars and hundreds of labor hours. Consider a retail tenant that operates thousands of locations, when the company’s lease data resides in an AI platform that can interpret and extract with the push of a button, leadership can easily review all lease obligations and opportunities to help drive informed decisions.

The Takeaway

Platforms that harness the power of artificial intelligence will fill a huge hole in the commercial real estate industry by allowing companies to mitigate risk through more accurate analysis and predictions in a compliant and cost-effective manner. While there will likely always be a need for a human element, AI-powered platforms can streamline how companies think about their data. It will enable analyst to actually analyze data and not be relegated to being a data entry specialist. AI will allow decision makers to focus on strategic decisions and opportunities so they can uncover and understand the risks and opportunities that live deep in their real estate agreements.

The commercial real estate industry involves living, complex documents that change over time and the need for a dynamic platform to capture this evolving data is more pertinent than ever. As more firms capitalize on AI’s benefits, it will become the standard, with the early adopters extracting insights and competitive advantages and leading to long-term productivity.

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