The Limitations of AI in Commercial Real Estate

Reflections on the current state of AI for Commercial Real Estate in 2024. 

Written by: Todd Kuhlmann, CCIM - CEO/President of TheAnalyst PRO

While AI has made significant strides in various industries, its application in CRE comes with certain limitations. Understanding these limitations is crucial for professionals who rely on accurate data and analysis.

1. Data Quality and Accuracy

AI algorithms are only as good as the data they are fed. In CRE, data accuracy is paramount. AI systems often rely on internet sources to gather information, which can sometimes be outdated, incomplete, or incorrect. 

Unlike platforms like TheAnalyst PRO, AI can sometimes present information that lacks the necessary precision for high-stakes decision-making in CRE. TheAnalyst PRO’s complex and tested algorithms ensure that financial analyses are both accurate and reliable, providing CRE professionals with data they can trust for critical decision-making. These sophisticated algorithms are designed to process and analyze a multitude of variables, delivering precise insights that enhance the overall quality and credibility of property evaluations.

For instance, in a recent analysis and financial assessment of an apartment complex in a major US market, I asked ChatGPT for the current CAP rates. ChatGPT responded with a CAP rate of 4.00%. However, this rate was from two years ago, and the current CAP rates for apartments in that market had risen to 5.50%. This significant discrepancy highlights the importance of using up-to-date and accurate data. It is crucial for commercial real estate brokers to avoid relying solely on AI for current market information, as it may not always provide the most up-to-date and accurate data needed for informed decision-making.

2. Contextual Understanding

Commercial real estate is complex, involving various factors like market trends, economic indicators, and local regulations. AI, despite its advancements, still struggles with contextual understanding. It might not fully grasp the nuances of local market conditions or the specificities of a property that a seasoned professional or a specialized platform like TheAnalyst PRO would consider. This limitation can lead to misinterpretations and potentially flawed analyses.

3. Limited Scope of Analysis

AI excels at processing large amounts of data quickly, but it has limitations in the scope of analysis it can provide. For instance, AI might overlook critical aspects such as the historical significance of a property, the impact of future developments in the area, or unique characteristics that could affect the property’s value. TheAnalyst PRO, on the other hand, offers tools that enable a thorough and comprehensive analysis, considering all relevant factors to provide a holistic view of the property.

4. Dependence on Historical Data

AI heavily relies on historical data to make predictions. In the dynamic world of CRE, past trends do not always predict future outcomes accurately. Market conditions can change rapidly due to various factors like economic shifts, policy changes, or unforeseen events. TheAnalyst PRO allows users to input real-time data and current market conditions, ensuring that analyses are up-to-date and relevant.

5. Ethical and Legal Considerations

AI’s data-gathering methods can sometimes raise ethical and legal concerns. Issues such as data privacy, consent, and the potential for biased algorithms are significant considerations. In contrast, TheAnalyst PRO adheres to strict ethical guidelines and legal standards, ensuring that all data used in analyses is confidential and handled responsibly.

Conclusion

While AI has undoubtedly brought innovation and efficiency to many industries, its application in commercial real estate has limitations that professionals must acknowledge. Platforms like TheAnalyst PRO provide a robust addition to your toolkit, offering accurate, reliable, and comprehensive tools for property analysis and marketing. By understanding the limitations of AI and leveraging trusted platforms, CRE professionals can ensure they are making well-informed decisions that will benefit their clients and businesses.

In the fast-paced world of CRE, the combination of human expertise and reliable technology like TheAnalyst PRO remains the gold standard for accurate property analysis and successful real estate investments.

Want to see this amazing platform for yourself?

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are winning assignments and closing deals with ease!

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Any Market. Any Specialization. TheAnalyst PRO has you covered!

Versatility and Adaptability:
Essentials in the World of CRE

You want to be ready to tackle any deal that comes your way, whether you're working in a small tertiary market or the central business district (CBD) of the largest city in the world. That’s where TheAnalyst PRO comes in. 

Built for ALL CRE PROFESSIONALS - Regardless of specialization

TheAnalyst PRO provides an all-encompassing toolkit designed to enhance your performance, regardless of the asset class or market conditions. Whether you're valuing a strip mall for a long-standing client or guiding a new client through potential leasing options, TheAnalyst PRO ensures you have the resources to deliver exceptional results.

Multifamily  |  Self Storage

For multifamily and self-storage properties, TheAnalyst PRO enables you to create detailed Discounted Cash Flow (DCF) analyses with easy-to-read unit matrices. Assess the financial viability of your projects with PRECISION and CONFIDENCE! 

Additionally, TheAnalyst PRO's demographic analysis and due diligence tools help ensure that the surrounding area supports your proposed end use, giving you a comprehensive understanding of the market dynamics.

View Sample Multifamily Package

Retail  |  Industrial  |  Office

When it comes to retail, industrial, and office spaces, TheAnalyst PRO offers robust tools to analyze the profitability of any deal. 

Take into account every aspect of existing leases with ease. TheAnalyst PRO allows you to run Weighted Average Lease Expiry (WALE) analyses, both physical and economic, providing a clear view of the property's performance and risk!

View Sample Retail Package

Leasing

Efficiency is key in leasing. While conducting a property tour, TheAnalyst PRO helps you identify the most time-effective routes to cover all potential sites, saving you valuable time and resources. 

The Property Tour and Rating feature, combined with a Comparative Lease Analysis, ensures you present your clients with the best possible options, backed by solid data and thorough analysis.

View Sample Property Tour and Rating

Elevate Buyer Representation

As a buyer’s representative, presenting information clearly and attractively is essential. 

TheAnalyst PRO transforms poorly prepared materials from sellers into beautiful, comprehensible packages that your clients will appreciate. Our tools allow you to re-package and enhance the seller’s information, making it easy to understand and make informed decisions.

Conclusion

TheAnalyst PRO is designed for all CRE Professionals regardless of specialization. With our comprehensive suite of tools, you can tackle any deal with confidence and expertise. Whether you’re working with multifamily, self-storage, retail, industrial, or office properties, TheAnalyst PRO has you covered. 

Empower your business, impress your clients, and elevate your performance with TheAnalyst PRO – your ultimate CRE toolkit.

Join the THOUSANDS of CRE professionals that 

are winning assignments and closing deals with ease!

Multifamily Analysis and Marketing

Multifamily is a hot topic in commercial real estate these days!

We decided to do an update of where things stand, and how TheAnalyst PRO can help

work those multifamily deals with great speed and little effort.

Presented by Todd Kuhlmann, CCIM and Founder/CEO of TheAnalyst PRO (who is

quite partial to the multifamily sector of investment real estate) we give a quick snapshot

of recent metrics and where multifamily and apartments stand in the market cycle right

now.

Watch training webinar here

Valuable take-aways that can be used to win investment deals right now:

Identify Cash Cow Multifamily Properties

How to Interpret all of these Valuable Metrics

This full session on running a multifamily scenario in TheAnalyst PRO includes:

• Ability to run scenarios by Rent Roll or Unit Matrix.

• Use for rental houses up to multi-hundred units, and investment portfolios.

• Value Add! How to account for renovations and rent increase/customization.

• Include Key Performance Indicators and highly visual graphs!

• In depth presentation on how to create and interpret TheAnalyst PRO reports in a multifamily scenario.

• Compare current performance vs. pro-forma. Show that little changes can increase property performance!!!!

Other valuable features were presented as well:

• Create an impressive marketing presentation to market your multifamily investment/deal: PDF, Flipbook, property website and more

• Feed active properties to your website

• Lead generators

• Chat GPT creates property descriptions for you

• Location risk analysis

• Extensive 24/7 Training Center available for free in TheAnalyst PRO

Want to see this amazing platform for yourself?

Join the THOUSANDS of CRE professionals that 

are winning assignments and closing deals with ease!

Schedule a Demo TODAY!

First Impressions Matter: Distinguished Testimonial from TheAnalyst PRO’s Inaugural Customer

TheAnalyst PRO's First Customer: 

Karl Landreneau, CCIM, SIOR and NAI Latter & Blum

In 2011, Karl Landreneau, CCIM, SIOR and his office became TheAnalyst PRO's first customers! 

• Decades of Commercial Real Estate and Analysis Experience

About 13 years ago, Karl and his team of 110 agents at NAI Latter & Blum were searching for a system that could streamline the creation of financial analyses and marketing materials. Although Karl was fully capable of developing complex financial models and hiring marketing professionals, these tasks were time-consuming, costly, and, most importantly, slow.

• Enter, TheAnalyst PRO

Then they discovered TheAnalyst PRO. With minimal inputs and just a few clicks, Karl and his team can now efficiently run financial analyses and produce stunning marketing materials for any property they encounter. 

• Tertiary Market

This capability is particularly vital in their tertiary market, where they deal with a diverse range of property types and classes. When agents encounter unfamiliar territory, they have a plethora of training videos available to them.

•  Excerpts from Interview:

1. What brought you to TheAnalyst PRO?

"I wanted something that I could use that made sense but also had a graphic portion to it so that my presentation looked professional - and it had to have some ease. We all know that commercial agents, for all intents and purposes are lazy. So, I looked for something way back then that I could push a button and I had a presentation. Ive been a user since the beginning." 

2. Why do you enjoy using TheAnalyst PRO?

"It has all the elements that you need, no matter if you are doing an industrial distribution center or if you're doing a 150 unit multifamily complex with different room rates and different bed rooms... It touches all the points." 

3.  How does TheAnalyst PRO help you in your market?

"The other thing that's really good about TheAnalyst PRO is, as a tertiary market place, you don't do everything everyday. And you have those training videos which are great refreshers... for lease comparable, etc. TheAnalyst PRO is absolutely incredible because of the presentation piece that goes with the numbers. The features are there, you just have to look at it and let it meet your needs." 

4.  What is the most important aspect of TheAnalyst PRO for your business?

"As simple as I can say it, its the presentation piece. We can use it, its not hard. But when we get in front of a client with that presentation, they know that we spent time with that property. We didn't just put it on a spreadsheet or the back of the napkin - we actually are giving them something they can look at and understand. And I think that is one of the greatest features of TheAnalyst PRO - the presentation piece of it." 

Want to see this amazing platform for yourself?

Join the THOUSANDS of CRE professionals that 

are winning assignments and closing deals with ease!

Schedule a Demo TODAY!

Artificial Intelligence for Commercial Real Estate!

 Create Property Overviews and Descriptions in SECONDS using TheAnalyst PRO's ChatGPT!

In March of 2023, TheAnalyst PRO integrated ChatGPT functionality and vastly improved your ability to generate an array of marketing materials! 

Over a year later, and we have upgraded to the latest ChatGPT 4 language model, allowing you to generate up-to-date property descriptions and overviews in mere seconds!

With an incredibly simple single-step process, you can generate perfectly written property overviews, descriptions, or even informative content. 

Answer questions like:

• Why should I invest in Austin, Texas?
• What does the future of Burlington, Vermont look like?
• What is Dunedin, Florida known for?

Want to see this amazing platform for yourself?

Join the THOUSANDS of CRE professionals that 

are winning assignments and closing deals with ease!

Schedule a Demo TODAY!

EXPLAINED: Optimal Holding Period

Understanding Optimal Holding Period in

Commercial Real Estate

When it comes to commercial real estate investments, timing can be just as crucial as location.

One of the most strategic decisions an investor can make is determining the optimal holding period for their property. This is the period that might yield the highest returns on the sale of the investment property.

Calculating the Internal Rate of Return (IRR) for different holding periods can significantly enhance decision-making. Tools like TheAnalyst PRO simplify this process, making it accessible even for those new to the intricacies of real estate investment.

Why Calculate the Optimal Holding Period Using IRR?

1. Maximize Returns: The IRR is a critical metric that helps investors estimate the profitability of their investments over time. By analyzing the IRR for different potential exit years, investors can identify the optimal holding period that maximizes their financial returns.

2. Strategic Planning: Knowing when to hold or sell an asset can significantly impact an investor's portfolio. A calculated holding period allows investors to align their real estate investments with broader financial strategies and market conditions.

3. Risk Mitigation: Longer holding periods might expose investors to market fluctuations and economic downturns. Calculating the optimal holding period helps in mitigating these risks by timing the sale when the market conditions are favorable.

TheAnalyst PRO: A Tool for Simplified Analysis and More

TheAnalyst PRO stands out as an invaluable tool for commercial real estate professionals and investors looking to streamline the process of calculating Optimal Holding Period using IRR. Here are the top three reasons why this software platform is indispensable:

1. Ease of Use: TheAnalyst PRO is designed with user-friendliness in mind. Even those new to commercial real estate can navigate its interface with ease, making complex calculations like IRR straightforward and quick. This accessibility ensures that all brokers and investors, regardless of their experience level, can make informed decisions.

2. Professional Reports: The platform not only performs calculations but also generates professional reports that can be shared with clients or used in investment presentations. These reports enhance the credibility of the analysis and assist in communicating the findings effectively.

3. Decision-Making Support for Investors: By providing clear, data-driven insights into when to buy, sell, or hold an investment, TheAnalyst PRO acts as an essential tool for guiding investor decisions. This support is crucial in helping investors maximize their returns while reducing potential risks associated with their investments.

In the dynamic field of commercial real estate, having the right tools to analyze and strategize investments is crucial. TheAnalyst PRO offers a robust solution for calculating the Optimal Holding Period by IRR, ensuring that investors can make the best decisions based on solid financial metrics.

Its ease of use, ability to generate professional reports, and support in decision-making processes make it an essential tool for anyone serious about maximizing their real estate investments. Whether you are a seasoned investor or just starting out, TheAnalyst PRO can significantly enhance your investment strategy.

Want to see this amazing platform for yourself?

Join the THOUSANDS of CRE professionals that are 

winning assignments and closing deals with ease!

Client Testimonial: Joseph Dusch

 We are truly honored to hear such positive feedback from Joseph Dusch of Gundaker Commercial Group!

Thank you so much for your support - 
We can’t wait to see your next big win!

How did you hear about TheAnalyst PRO?

I had my business partner chirping in my ear, Joe you gotta check out TheAnalyst PRO it gives you so many advantages with marketing and wowing clients to win listings... it sets you above the rest. 

How has TheAnalyst PRO helped your business?

You can knock out an OM in 10 minutes at any point with TheAnalyst PRO!

Otherwise, I have to get with my marketing coordinator and see if they're free. But that may take up to a week at some points. Especially if its really busy in the office. 

Having the convenience of creating Flyers, OMs, and also analytics with finance involved to show your clients IRR and loan information is very pertinent and its not something you can find just looking out and doing something yourself. The automation is probably the biggest advantage for me. 

Its helped me win a 4 or 5 million dollar listing and its helped me win listings as little as 250,000 dollars or strip centers that I am leasing out at 10 to 12 dollars a square foot. The range of automation you can use to win things is great!

Who is TheAnalyst PRO for?

I would say, anyone can use it and get an advantage. 

But your local brokerages that have to bump elbows with the national brokerages and have to do things on the fly on their own, especially those that cant rely on a support team, this is the perfect tool to be right at the same level, if not above some of those marketing teams that you're going against on nationally traded brokerages. 

So, for the little guy to come up and look and feel as if they are one of the big guys feels really nice.

Join the THOUSANDS of CRE practitioners winning assignments 

and closing deals with TheAnalyst PRO!

Sign up for a free demo TODAY!