At VTS Accelerate 2024, our panel on predictive analytics brought together industry leaders to discuss the transformative power of real-time data in commercial real estate.
Hosted by Ryan Masiello, the panel featured insights from:
The discussion covered the state of the market, investments in AI, and the cultural shifts required to fully embrace these technologies.
Shifting the focus from the rearview to the front windshield
Scott Rechler opened the discussion by highlighting the slow adoption of technology in real estate.
Real estate has traditionally relied on backward-looking data, what Rechler referred to as “the rearview mirror.” This approach is becoming obsolete as the pace of change accelerates, particularly post-COVID. “We’ve had the luxury historically to see what had happened to guide where we’re going. Now, we really need to be able to see what’s in front of us versus what’s behind us,” Rechler emphasized.
He elaborated on how real-time data from VTS helps RXR determine tenant demand and investment opportunities, especially in the volatile office market. “The best way to do that is to actually look at where’s the activity in that submarket, where’s the activity in the transit, cell service, retail sales, restaurant sales, the showings of spaces that we can get from VTS of . . . similar spaces – so you knew if you have a good building, with a good capital structure, there’s actually tenant demand there.”
Max Saia echoed Rechler’s sentiments, noting that COVID-19 was a critical forcing function that revealed the inadequacies of relying on backward-looking data. What worked back then simply doesn’t work now.
Investing in AI could transform your business processes
The panelists also discussed their investments in AI and how it’s reshaping their operations. “We can actually do predictive analytics as to whether someone’s gonna renew their lease or not renew their lease, and it’s over 80% accurate today,” Rechler explained. By analyzing thousands of data points, such as interaction frequency with the concierge and mailroom activity, RXR can better manage vacant units and push for higher rents.
Giving AI the work that no one wants to do
Rechler shared how AI is used to fill out due diligence questionnaires and abstract leases. “The best thing about artificial intelligence is it’s taken away a lot of white-collar manual labor. That was what I was calling the soul-crushing part of the job,” he said. This allows employees to focus on more value-added activities.
Many companies are now seeing the value of integrating AI to boost their operations. Saia emphasized the importance of having both internal and external data to make informed decisions. “Forget about going out on the market and buying all these new cool sources of information. If you can’t compare that accurately to your ongoing operating day-to-day, you’re just not gonna get as much value out of it as you could in that world.”
Looking ahead, the panelists predicted significant impacts on the job market due to AI. Rechler mentioned that while back-office jobs might decline, the demand for knowledge workers will increase, particularly in areas focused on AI and cybersecurity.
Overcoming resistance to challenges and cultural shifts
Adopting new technology in a traditionally conservative industry like real estate presents some challenges. Rechler and Saia discussed the importance of clean data governance and a commitment to continuous improvement. There’s always room for human error, so we need more rigorous data management practices and a good system in place.
Saia also pointed out that the successful integration of AI and data analytics requires top-down intent and collaboration across various business functions. From top executives who should work with the investment, leasing, and asset management teams to the data science research team. They all need to be collaborating in order to be successful.
At RXR, data scientists work closely with investment management and asset management teams to develop impactful applications. “I look at this data science part of it just like I would look at our architectural team, our construction team, our leasing team. They have to be integrated as part of that team, not in isolation,” Rechler stressed. This integration helps data scientists understand the real-time needs and challenges faced by their colleagues so they can come up with more relevant and effective solutions.
Build smarter strategies with predictive analytics
Predictive analytics and AI are no longer optional – they’re essential tools for success in commercial real estate. As we move forward, the ability to harness real-time data will define market leaders, enabling them to predict trends, manage assets, and improve tenant experiences.
The future promises a landscape where AI-driven insights drive smarter investments and operational excellence. If we can embrace these changes, we can maintain a competitive edge and sustainable growth in the industry.
