How much – and how quick?

Shifts to working patterns have brought a whole new range of factors into play with regard to assessing the value and relevance of office assets. In this context, AI can greatly assist the management of risk and values with automated valuation models (AVMs) that can analyse portfolio or asset-specific data. Through an AVM, owners can access individual property or portfolio valuation data as easily as any individual can check a bank account balance.

“In the past it has been next to impossible to do this with commercial real estate because it is not as liquid as other investment assets,” says Tyrone Hodge, Global Head of Risk Advisory at JLL.

“However, we have successfully created a suite of risk analytics tools by combining statistical models with automation. We now have the ability to provide timely insights on changes in property values and market insights to owners and lenders.”

For a highly granular process such as office valuations, AI is capable of analysing large amounts of data that collectively can have a measurable impact on value. It can weigh a wide field of data insights and property nuances and are updated automatically as data changes. This continuous cycle of updates and recalculations has become an important tool for investors, lenders and valuers to gain a complete and accurate picture of value.

Getting the right fit

A vital part of the office leasing process is helping potential occupiers envisage how they could operate in a space. Being able to see a floorplan which shows how everything from workstations to meeting rooms and where the kitchen is, enables businesses to see how an office can adapt to their particular requirements. For many years, the solution has been to get the building’s architect to produce sample floorplans. This was quite a protracted process as plans went back and forth between involved parties.

Norwegian start-up, Laiout, believes it has the solution. It has built an algorithm that speeds up this costly process and boasts that it can “go from an empty floor to a filled up architectural floor plan in as little as four clicks”. Given that leasing of office space may involve talking to several prospect occupiers, anything which makes the visualisation process both more efficient and cost-effective can make a substantial contribution. British Land is among the businesses with which Laiout is now collaborating.

Intelligent energy use

Energy efficiency is now not just relevant in terms of having a responsible and sustainable attitude to the environment, it also has a material effect on attracting the right interest and boosting the value of a property.

Many UK institutions and global investors will look at the environmental credentials of a building as a substantial factor as to whether they will buy or fund an asset. However, given the profound change in working practices, it’s now likely that office buildings will be subject to even deeper scrutiny in terms of how they are being operated.

With office buildings often running at less than 100% capacity owing changed patterns of occupancy, there is a clear need to ensure they aren’t burning energy – and money – when no one is in the space.

Freddie Pritchard-Smith of Trustek – which advises landlords and developers on getting the right tech into their office buildings - comments: “Most buildings still operate under fixed points of turning the building on at 7am and then run at 100% until 7pm when everything is turned off, which is not aligned to the reality of how buildings are now occupied. So, AI products supporting the development of ‘on demand’ buildings are increasingly pivotal”. 

In a similar vein, responsive management of a building – the classic scenario of changing a lightbulb – can be disruptive until the work is done. To try and anticipate problems and minimise cost/disruption, the smart building platform Kodelabs has developed fault detection and diagnosis algorithms which are able to predict when things may break and make remedial suggestions to building managers even before they happen.

As these technologies advance, it raises the question of whether roles like Chief AI Officers (CAIOs) will become essential in managing AI-driven systems within office buildings, ensuring their effective and ethical deployment.

Seeing space as a service

Ultimately, the most important facet of an office environment is how people interact with it. For a workforce which is splitting its time between home, the office and other mobile locations, AI can play an important role in maximising their potential and making the office a more congenial place to be.

Nearly 30 years ago, Broadgate Estates introduced occupier-orientated websites which detailed local transport and amenities around the buildings they managed. Over time these evolved into building-specific apps which have, in part, been superseded by the many specialist apps that people already have on their phones (Citymapper, Open Table, Amazon etc) but AI will have a role to play in the office selection process.

Proptech expert and advisor, Anthony Slumbers, believes it is crucial for office providers to see ‘space as a service’ and explore how Generative AI and other tech can optimise the relationship between people and their office environment. Most of us may have encountered Generative AI though ChatGPT or similar models but, in this context, its ability to learn from human feedback and structure systems which respond to it that is relevant.

Slumbers comments: “Understanding human-centric needs can help companies decide when physical presence is truly beneficial. Generative AI could optimise a schedule that combines remote work with periodic in-person congregation aimed specifically at activities that benefit most from being face-to-face, such as brainstorming sessions, team-building activities, or mentorship programs.

“In this way, Generative AI would help us understand that the office the more qualitative aspects of work. AI could influence real estate strategies to focus on creating spaces that enable collaborative activities rather than just providing a seat and a desk."

Find out more about our PropTech offering here. For further details, contact Real Estate partner Glenn Ruddy at gruddy@dacbeachcroft.com and Technology partner, Tim Ryan at tryan@dacbeachcroft.com.