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Yes, I've recently switched to AI assisted UW in lieu of replacing a analyst.
What company/software?
Archer
IMO, I believe analysts will start using AI to assist in underwriting and speed up the process by 100X. It still needs to be checked/reviewed/tweaked. I could see this reducing the number of analysts needed overall but there still needs to be someone who knows what's going on under the hood in the excel models.
My thoughts as well. I use AI as a productivity tool, but not an underwriting tool specifically. I anticipate this will be much different in the coming years. I can't wait
This is with anything. Nobody will fully ever be replaced, but I can see a nearby future where we need maybe 80% less analysts.
I had this argument with a radiologist friend of mine. He makes $600K+ and works from home mainly. He said AI will never replace radiologist, but makes us 3x more productive. To which I replied, its never going to replace every radiologist, its just going to make it so we need less of you by a lot. He got mad and start saying I had no idea what Im talking about.
Both can't be true. Clearly he knows something we don’t. Is he prepping for a nationwide arthritis epidemic or a 10x spike in extreme sports injuries? This is a strong buy signal for pharma and Monster Energy.
AI will be used as a tool to increase productivity, but not completely replace analysts. CRE is still a very inefficient and localized industry with many nuances and different legal restrictions by municipality that would make it hard to completely replace with AI.
Maybe on the asset management and debt side more so, especially for portfolio level stuff that you would see at a Blackstone-type institutional fund, but I view development as relatively AI proof given all the local complexities involved with getting a deal done (approvals from local municipality, bidding out GC contracts, selecting architect, etc.). Would be impossible to automate fully.
same as any other sector. if your analysts are doing low-thought data migration, they'll be replaced by AI. if your analysts are using thought and judgment, they'll use AI to work faster but won't be replaced.
imo there are many execs being set up for serious disappointment re: the number of employees they'll be able to replace with AI.
No
if people are in denial about this then they are the first to go.
better off embracing it, but with the power of AI and the vast improvements it is making each day, there will not be a need anymore for a team of analysts. RE being lean as it already was pre AI, this will make the industry even leaner.
the time researching, underwriting, modeling is done in seconds with AI. just need someone to put it all together.
If there are no analysts how will there be future associates and vice presidents, etc?
Eventually the talent pool will be people who don’t know what they are talking about. Just my .02
Theoretically the pyramid becomes a straight line. It's not that no one will know what they are doing, but it'll be way harder to have a white collar role.
For what it's worth I'm bearish on this stuff happening literally any time remotely soon. Agents aren't good, LLMs won't scale to AGI, and tons of people in my opinion- media included- are gobbling up non sensical tech CEO marketing disguised as conversations about humanities future
I think the bubble will pop and after we'll have a clearer idea of where LLMs will actually help us. Spoiler: it won't be by replacing anyone who uses a modicum of creativity and strategic discretion
If you look at AI videos, they were horrible 1-2 years ago, and now they're basically really hard to see if they are AI - the progress was insanely fast and good.
At the end, the people who hold the capital will have all the power and we'll need a french revolution style movement.
Lots of denial here folks....are yall not using this for work or what? My first and most important interview question from here will be tell me how you will use chat to do your job. I literally use it for legal docs, market research, asset management. everything. There is simply no doubt about the fact that my productivity has increased exponentially this year. I can do just do way more shit way faster than ever before.
Analysts will never go away for the simple reason that senior folks need someone to do the actual work (AI assisted or not) and talk down to and this is at the end of the day a people business like any other - that will never change. However the amount of analysts will surely be reduced and teams will continue to get leaner as a result of this major productivity increase. We've been planning to hire an analyst for a while...but we've managed without another one and with how much myself and an analyst can do now so much faster I don't ever see us expanding further tbh. This is a 25 person fund btw.
Deniers will say well it still sucks at excel (yes for now) or this and that - I think they are grossly underestimating how quickly it will actually get there. I literally use it everyday and it has gotten exponentially more useful in a matter of months. Proper excel abilities are probably months away if not sooner. I have a hard time comprehending where it might all be in a year.
So what does this all mean? Number one if you're not using it and learning what you can do with it everyday, you will get left behind sorry. Do you literally not realize you sound like a boomer denying the internet 20 years ago? Teams will get leaner, less analysts will continue to exist with our notorious shit pay, making the people at the top that much richer. This is not just our industry folks, it's happening far and wide - take the radiologist thing above for example. We're not solving cancer for fucks sake, gate keeping our monkey work in an industry of C students as we're known as something AI won't be able to tackle with ease is mental illness. So learn how to use this shit, don't get left behind and you'll be one of the rich fucks at the top reaping the benefits. The new reality for the young is kinda shitty, just the same as the reality that boomers mortgaged the future of our generation for their profits and now we're gonna get clapped by AI next - it is what is. Hate the game but play it. /rant
What kind of asset management/market research work do you get done with AI (I assumed you're using LLMs - if it's something more specialized do tell)? How do you know to trust that it's not hallucinating? I can get parsing legal docs, drafting emails, brain storming. I want to up my AI game as well
Seconding this, would love to know which tasks exactly and which asset class you’re in. I’m a senior Multifamily-only Acq guy, and have yet to find a specific use case besides summarizing retail leases and legal docs. That said, the broker almost always summarizes the leases and I’m going to have my attorney do abstracts during DD no matter what. Additionally, I’m responsible for legal docs like the PSA alongside my counsel, so it’s risky to read the cliff notes output only - I’ll get fired if we miss something material and it upends the deal. I’d rather leave that up to (my own) human error & experience.
Other tasks like writing emails don’t save much time - I write maybe 1 “long” email per week in my senior role. Most communication is Teams messages, short emails, in person conversations, or phone calls. Just seems like juice is not worth the squeeze for most recurring mid- and senior-level tasks. So would love to hear how much time you are saving and where exactly.
I also have concerns with data security, particularly whether you should even be uploading any non public / confidential info to such a platform. Nearly every T12, rent roll, lease, etc. fits that bucket for an acquisitions pro. I know some very large companies are building their own AI platform for this exact reason, but will be awhile before everyone can do that.
I feel like everyone wants to have an opinion about what AI will do in the future. The problem with that is this is a technology that is 1) moving very fast and getting exponentially better at some (but not all) things, 2) there are a lot of people with vested interests in talking a big game about everything AI (venture capitalists, tech majors, shitty AI startups etc.) and 3) there are a lot of people who think this could be the next internet and don't want to be left behind - think the 45 year old director of RE acquisitions who likes playing around with Claude on the weekend and posting on LinkedIn about how the new update last week will change everything.
In that world, my approach has been simple - take it a day at a time. ChatGPT good for summarizing a 200 page PPM? Of course, use it. AI agent still not very good at Excel? Don't use it and it's ok, you don't need to have an opinion of whether it will get better at Excel by next year. If it ever does, you can use it then. You don't need to follow every update from OpenAI or Gemini - if it gets better, 100% you will know.
Also, I ignore the 80 DMs I get on LinkedIn every week from salespeople at yet another new AI start up that supposedly helps solve some small issue in my workflow. It's a foregone conclusion that the vast majority of these tiny VC baked companies will not be around in the next 5 years.
Lastly, given the relatively low pricing on many of the best AI products, I just don't believe anyone will ever have a sustainable advantage simply by using AI in underwriting or asset management. One scenario is that in time, this becomes like the MS Office suite of products - something everyone will use in their workflows. The other (arguably more unlikely) scenario is that the AI hype dies down in the future and you will have a small set of people continuing to use and refine these products with most of the rest of the industry not caring all that much. Let's see where on that gradation we end up in a decade.
I attended a RE happy hour in SF tonight.
Got to overhear AI companies pitch real estate folks over drinks.
Couple observations:
Genuinely interested in your insight here but don't follow this bullet.
TIA!
My hunch is sell side will adopt these tools faster. They don’t have to live with the numbers produced. Everything they produce are marketing materials, more or less. I think the part of sell side that would especially on the lower end, up to $20MM per transaction properties. I mentioned mega brokers because the sales to user acquisition ratio is higher. From an operations point of view, the more your template becomes the standard for the firm, the more entrenched your AI service/product it becomes. The race is on.
Regarding PropTech in the 2010’s, my name and employer were on some quotes for PropTech start ups marketing materials. Most of them, I never heard from again. In 2017 or so, one of my companies was one of the early users of Matterport for perpetual use for 3D building floor plans for leasing (not just selling a house). They or the company I was using that got acquired to become part of Matterport, were focused on helping to sell houses, a big, deep market. They at first didn’t understand and took down our 3D model and I noticed it was offline (I was operating multi resident assisted living communities in single family houses). Anyways, they went from a big addressable market to niche CRE.
I think the AI financial analysis and OM disruptors are starting from the big finance disruption (larger TAM) and then customizing to smaller sectors such as CRE. I think the failure for unicorn seeking PropTech is our CRE market is small with high user acquisition costs and silo’s gatekeepers (property management firms for customer facing tech; tech resistant CRE traditional firms).
My personal take is, overall AI services have few if any barriers to entry. Especially low touch B2C AI services will have competitors from overseas. B2B will be less of that. I hate competition, it turns me off.
Established sales channels / B2B customer relationships are probably the biggest asset (I invested in Salesforce and ServiceNow on this hunch and so far it hasn’t paid off). But I think about what if some of the more incumbent companies (Yardi, CoStar) can get into the AI. Are they going to be the big losers? Or can they add to their service offerings, maybe with M&A since they are moving slow? I think AI will be bigger than PropTech, which was a niche sector to begin with. Disrupting part of the labor expense for CRE is a different animal with tangible benefits.
I’m no Nostradamus.
Everyone’s talking about how AI will replace analysts as if analysts haven’t been leveraging UWing software for years. lol
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