I was reading the WSJ article this morning about the CEO of Ford saying he anticipates AI replacing half of white collar workers.
How do you guys see this playing out in the CRE world? I kind of feel like even if this is close to being true, CRE is usually slower than a lot of other industries to adapt to new technology and way too much of it is relationship based.
I think we see smaller analyst classes as AI is already pretty good at financial modeling. Maybe at some point it can actually write good investment memos too. This kind of leaves us in a weird place of less junior people in the industry and a much smaller talent pool to hire from for mid and senior level positions. I also think it can make attorneys exponentially more efficient leading to a need for less attorneys. I remember not too long ago I was actually charged billable hours for an attorney to make sure the execution version of a lease sent back to us was the same as the one that we agreed to sign. (Execution version was 500+ pages long due to extensive exhibits that included many construction drawings). Anyway, the file was difficult to work with in Adobe and Word and kept crashing everything. The attorney manually had to verify that it was in fact what we had agreed to.
Am I just an old timer not understanding how revolutionary AI is going to be for our industry?
AI's impact on the Commercial Real Estate (CRE) industry is a hot topic, and your observations align with some of the most insightful discussions on WSO. Here's how this could play out:
Slower Adoption in CRE: You're absolutely right that CRE tends to lag behind other industries in adopting new technologies. The relationship-driven nature of the business and the fragmented/niche structure of the asset class make it relatively more resistant to automation and commodification. However, this doesn't mean CRE is immune to AI's influence—it just might take longer to see widespread changes.
Impact on Junior Roles: AI is already proving its capabilities in areas like financial modeling and data collection. This could lead to smaller analyst classes, as many of the repetitive, lower-value tasks traditionally handled by junior employees are automated. Over time, this could create a bottleneck in the talent pipeline, with fewer junior professionals gaining the experience needed to move into mid- and senior-level roles.
Efficiency Gains for Attorneys and Other Professionals: Your example of the attorney manually verifying a 500+ page lease is a perfect illustration of where AI can shine. Tools that can quickly and accurately compare documents, analyze contracts, and flag discrepancies are already being developed and will likely reduce the need for such manual work. This could lead to fewer attorneys being required for routine tasks, though their expertise will still be critical for complex negotiations and strategic decisions.
Value-Creating Roles Will Persist: While AI can handle many technical and repetitive tasks, roles that require managing relationships, applying expertise, and navigating complex stakeholder interactions are much harder to automate. These aspects of CRE, which are deeply human and relational, will likely remain essential for the foreseeable future.
Long-Term Implications: Over the next few decades, AI's ability to handle more complex tasks (e.g., writing investment memos, creating advanced financial models) could reshape the industry further. However, as noted in WSO discussions, the human factor in CRE—like relationship-building and strategic decision-making—will continue to be a significant barrier to full automation.
In summary, while AI will undoubtedly revolutionize certain aspects of CRE, the industry's unique characteristics and reliance on human relationships will likely slow the pace of change compared to other sectors. That said, professionals who can adapt, embrace technology, and focus on value-creating activities will be best positioned to thrive in this evolving landscape.
Sources: Work at top AM -- AI will virtually kill of entry-level roles in AM over the next 5yrs, Will robots replace your consulting or financial career?, Calling out Goofy @CRE and the rest of Wall Street Oasis. Real Estate is the worst asset class going forward., The Real Estate Job Hunt - Mid Level, Google partners with Goldman Sachs in automating Investment Banking
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