AI & CRE: What's all the Hype?

It's been a hot topic at every conference, every industry meeting and get-together and within most retail and commercial real estate ("CRE") organizations.

Hell...its' been a hot topic EVERYWHERE!

Most say AI will "revolutionize" CRE. Transform the way we transact, process information, market properties, etc., etc..

Let's weed through the AI hype and look at true impact...at least from one person's perspective (that would be me 😎🥸).

IMMEDIATE IMPACT

Lease Abstraction - LOI and Lease Creation
Anything Data and Financial - rolling up information, creating speed to insights and general (big) data processing
Underwriting
Transactional Efficiencies - paperwork, payment, filings, etc.
Marketing - especially more company directed and social media marketing
Lead Generation & Management - including lead communication (at least initial and screening)
Overall Communication Efficiencies (agentic AI)
Image/Video creation - for properties, tours, marketing and more
Allowing data-driven questions to be answered with less bias

ALWAYS choose performance and quality over novelty
GenAI is assistive. It gets smarter, and makes humans smarter, over time which means a lot of AI training is involved
Geo-AI is very different than GIS and requires a different skill set
Make sure you have the right data (and right training) for the questions you are asking and/or the story you are trying to tell
Stay away from FOMO and create or use an AI infrastructure/platform that meets your needs

AND MOST IMPORTANTLY...AI (in CRE) does not (and cannot) replace local market knowledge

If you think AI can be your boots on the ground, have key relationships to provide insight on rents, performance, space coming available, etc...think again.

If you think AI will be able to understand how unannounced developments change trade areas, shopping patterns, routes to work, etc...think again.

If you think AI will be able to see subtle changes in demographic makeup early enough to react to it...think again.

AI will create efficiencies, speed and impact CRE in ways we are only starting to grasp, but AI will not trump local market knowledge. It will enhance and compliment that strategic advantage. Show me I'm wrong!!

IN THE NEWS

CoStar: Service-based brands will be biggest leasers of real estate space in 2025

"For the first time, service-based retailers are now the most active acquirers of retail real estate space, according to CoStar."

Will Global Retail Giants’ Big Bet on American Consumers Pay Off?

"Zara, Uniqlo, Mango and Primark and other European and Asian brands plan to open hundreds of stores in the US in the coming years. They’re hoping American consumers will keep spending — and that they’ll give new labels a try despite having plenty of options."

How abandoned office buildings in L.A. could be transformed into $1,000 a month studio apartments

"A new report from Gensler and the Pew Charitable Trust proposes converting old office buildings into SRO-style housing."

The challenge of disparate data in commercial real estate by Trepp

"As the commercial real estate (CRE) industry gets ever more data-centric, disparate data is a major problem for teams."

Demand for delivery is not slowing down

"Uber Eats reported a big jump in gross sales for the last quarter of 2024, suggesting that more consumers are choosing to have food and other products delivered to their homes"

NOSTALGIC RESTAURANT SPOTLIGHT:

STEAK & ALE

Founded in 1966 in Dallas, Texas by the one and only Norman Brinker, a legend in the restaurant industry.

"The chain, with its dimly lit Tudor-style decorated dining rooms, billed itself as offering an upscale steak experience at lower prices. It was seen as a model for the casual-dining steakhouse chain, and many executives there went on to run other large chains." [Wikipedia]

Purchased by Pillsbury in 1976 (113 locations), the chain became part of a restaurant group with Burger King, Bennigan's and others. Pillsbury then spun off Steak & Ale in 1982 (along with Bennigan's) into S&A Restaurant Corp.

Rapid growth in the 1970s and 1980s led Steak & Ale to be one the the preeminent casual dining chains of its time, peaking at 280 locations.

Competition ensued and differentiation became harder to achieve. In 1988, Metromedia purchased Steak & Ale (keeping the S&A company name) and merged it with Bonanza and Ponderosa in 1993. With no improvements in site, S&A Restaurant Corp. filed for bankruptcy in 2008, closing all Steak & Ale and non-franchised Bennigan's locations.

In 2015, Paul Mangiamele (CEO of Bennigan's during its "comeback" attempt) and his wife closed on a management buyout becoming owners of the Steak & Ale and Bennigan's brands. The new company created was Legendary Restaurant Brands, LLC. Despite 2016 and 2020 announcements that Steak & Ale would return with locations in Mexico, these never materialized.

In 2023, a U.S. comeback was announced with a new location opened in Burnsville, Minnesota. The Steak & Ale website shows no other locations coming soon but there is one is Texas that has been planned. The website also shows franchising opportunities and really focuses on the history of the concept.