Editor’s note: This story is part of a series examining how various industries in Greater Philadelphia are adopting artificial intelligence.
Two years ago, Alterra Property Group moved its data from Excel to other Microsoft products that incorporate artificial intelligence and began creating a proprietary database on industrial outdoor storage properties.
As the Philadelphia developer doubled down on the often-overlooked segment of real estate, the company also incorporated more technology into its business decisions. Alterra Managing Partner Leo Addimando quickly realized its power.
The AI-poweredmodel swallows both publicly available information and Alterra’s own data, then spits out predictions. Based on a combination of seemingly random factors like construction building permits, credit card activity, in-migration, highway tolls and school enrollment, Alterra’s AI model indicated Greensboro, North Carolina, would be a worthwhile market to invest.
Alterra has purchased two properties in Greensboro since then.
“That was, we thought, quite futuristic,” Addimando said, “but it’s happening now.”
The application is an example of how businesses are beginning to leverage AI for market analysis. The emerging technology is poised to become ever more relevant in the real estate world given the endless possibilities, especially as developers and brokers become more familiar with how to use it.
Alterra Property Group Managing Partner Leo Addimando.
While AI is already helping employees write emails and sort data, it could soon play a major role in predictive analysis.
Alterra’s model absorbs property information like zoning designations, highway traffic and port wait times. Those are key factors that tenants would consider when looking to rent industrial outdoor storage space, which is typically clustered near transportation hubs and used to house large equipment.
While Alterra continues to learn what works and what doesn’t with its constantly evolving technology, Addimando said the system is doing exactly what it’s supposed to do.
“I’m not saying the machine is smarter than us,” Addimando said, “but the machine certainly does process a lot more information than we do many times over. It gives you insights.”
Alterra also owns several multifamily properties throughout Philadelphia. From a property management perspective, Addimando said technology like Nest thermostats, which use artificial intelligence to determine if tenants are home or not, can lead to more energy efficiency and significant cost savings.
It could also play a key role in an emergency.
“Having a real-time database of who’s away in a building in the event of an emergency is important, don’t you think?” Addimando said.
Ultimately, he believes businesses that embrace artificial intelligence are likely to gain an edge over those who don’t.
In the office market, artificial intelligence is contributing to leasing decisions. Brokerage firm JLL, for example, has used a program named Qbiq that creates a 3D model of a potential office just based on a submitted floor plan and additional requirements.
Within minutes, the program allows prospective tenants to take a virtual tour of their potential new space, allowing them to visualize a design for the space before making any decisions. The program has become popular among brokers competing for new clients, JLL Research Manager Emily Friedman said.
Emily Friedman of JLL.
“It’s got the ‘wow’ factor. It’s really cool. But also, it’s so helpful,” Friedman said. “It’s kind of like when you watch an HGTV show and you can’t picture the house but then they do the overlay. That’s what that’s doing. You’re seeing all the possibilities of what it could be.”
Friedman has used JLL GPT, the firm’s own version of ChatGPT, to help form insights on commercial real estate data. The system has JLL’s historical data from across the globe. If Friedman wants to comb through layers of data to find trends, she can ask JLL GPT to help.
With assistance reviewing data and identifying trends, Friedman has more time to work on bigger projects beyond the basics. Like other businesses tapping into artificial intelligence, the increased efficiency can improve day-to-day operations. But, so far, there’s been a learning curve with using AI.
“We always joke its like having a really not smart intern who’s never done things,” Friedman said. “You just have to be really, really specific and wordy.”
She described adoption of the technology as a work in progress.
“It’s only getting better,” Friedman said. “It’s only getting smarter.”
Sign up here for the Philadelphia Business Journal’s free newsletters, and download our free app for breaking news alerts.
Read the entire article on real estate tech innovations, or, read more news about real estate investing in Arizona. We encourage you to recommend our site to your fellow investors, allowing them to benefit from the valuable insights we provide. Thank you!
