According to a recent Forbes article by VTS’ Ryan Masiello, “it’s no surprise that AI has emerged as the next frontier in real estate technology.”

CRE retail experts don’t disagree with this assessment.

“AI has come a long way in retail leasing over the past five years,” said Brent Loomer, Lead Managing Consultant of RealFoundations. “What used to feel like a future-facing concept is showing up in practical, everyday ways across the leasing process.”

At the same time, Loomer and other experts told Connect CRE that artificial intelligence won’t replace jobs, and it isn’t effective without the human factor.

Legend Partners’ Managing Partner Tanner Olson said that AI helped cut his workload by 1% to 10%, depending on the transaction. “I think it’s making agents more efficient, but it’s certainly not taking off the workload that a lot of people might think it possibly could,” he added.

Upsides and Downsides

There’s no doubt that AI has evolved from basic data analytics to wider-range capabilities. “These advanced systems can now predict market trends, compare lease terms, provide lease abstracts, and even assist in tenant matching,” according to Jon Brecher, JLL Vice President.

These days, artificial intelligence supports real estate transactions in the following areas.

Documentation

Paperwork is a given with real estate. AI can help reduce the red-tape redundancies.

“You can take a 50-page lease and ask AI to do an abstract,” Olson said, adding that 15 companies right now are building AI platforms for abstracting leasing. While fact-checking is essential once the job is done, “AI does expedite that process a bit,” he said.

Mark Sigal, CEO of Datex Property Solutions, went a step further, pointing out that tools like MRI Contract Intelligence and Prophia use a combination of OCR, AI and machine learning to find leases’ key provisions, categorize them based on logic and data, and report by portfolio, property or national tenant.

Additionally, “a fairly standard tool is the use of Chat GPT for structuring and crafting narratives,” Sigal said. “This can add value to both the retail lease drafting process and the deal proposal process.”

AI can also help generate lease addendums. “You can feed an AI a lease and then have it create a drafted addendum or five-year extension,” Olson said. The process saves time, as the addendum can be presented to an attorney for review rather than the attorney drafting one from scratch.

But Sigal cautioned that AI documentation needs to be watched. “The technology is at the proverbial 80/20 stage,” he explained. “Automated abstraction works 80% of the time in terms of covered use cases, but the 20% of the cases not covered are so human-capital intensive, it mutes a large portion of the value for retail.”

Data and Analysis

Sigal pointed out that artificial intelligence can be useful for analyzing a retail leasing deal’s numbers, including net present value, net effective rent, gross profit multiple and related job costs.

Brecher agreed, noting that tenants and landlords rely on artificial intelligence to “analyze customer trip patterns, shopping behaviors and specific demographics.”

However, the experts expressed caution with AI’s resultant data. For one thing, artificial intelligence output is only as good as the available input data. As such, data governance and stewardship continue to be long-standing issues. “Clean, well-structured data results in smarter models,” Loomer commented. “Without it, AI is just automating bad assumptions.”

Stephanie Skrbin, a broker with Axiom Partners, added that not all data eggs should be put into an AI basket. “Dealmakers only share information with people they trust, so AI won’t have the full scope of market info that a human with boots on the ground does,” she said.

Then, there are the privacy issues involved with AI. “These have led to restrictions on using certain AI applications on company platforms due to security concerns,” Brecher said.

Negotiation Support

When properly used, AI can help with negotiations. Loomer indicated that the technology can surface “prepared clause language based on past deals, helping teams enter discussions with better context and more consistency.”

Sigal agreed, pointing out that Chat GPT and Anthropic can coach stakeholders in areas like negotiation strategy, competitive and market gap analysis and new client pitches. “Reid Hoffman, founder of LinkedIn and investor-founder of a number of AI startups, calls this dynamic of AI an ‘Intelligence Amplifier’ and argues that every professional should be using AI deeply to realize this cognitive gain,” Sigal added.

However, AI results are only as effective as human interpretation. “Remember, AI is not a substitute for human judgment,” Loomer said. While AI can focus on trends and opportunities and help accelerate analysis, “it still takes experienced professionals to apply context and make sound leasing decisions,” Loomer pointed out. “The art of the possible still requires human reasoning.”

Current Issues, Future Potential

Additional AI challenges include the cost of implementation as well as integration with existing systems. Furthermore, “there’s always the potential for bias in AI algorithms,” Brecher said. He advised that retail tenants and landlords understand the need for data verification and human oversight when handling AI outputs. Also necessary is “an understanding of the legal and ethical implications of AI-driven decisions,” he added.

Furthermore, AI shouldn’t replace legwork or relationship-building. According to Skrbin: “AI can certainly be a valuable resource, especially as the technology advances. But it should never replace picking up the phone and talking to people.”

Even with the challenges related to artificial intelligence, the experts believe that the technology is here to stay and will continue to evolve and improve.

 “Predictive analytics will continue to advance, giving teams the ability to model expected sales performance and occupancy costs with greater precision, ultimately supporting stronger deal structuring, smarter tenant selection and more informed long-term portfolio planning,” Loomer said.

Brecher added that AI progress could consist of improved tracking, note-taking, follow-up tasks and more efficient email summarization. “These advancements have the potential to create more efficient data-driven and personalized leasing processes in the retail sector,” he said.

Still, the experts explained that artificial intelligence is a tool to assist rather than a replacement. Said Loomer: “By removing manual bottlenecks and surfacing smarter insights, AI gives leasing professionals more time and better information to apply their experience, intuition, and creativity to each deal.”