How AI is driving new demand in commercial real estate
The AI boom has raised expectations over its ability to drive demand for commercial real estate
Expectations for artificial intelligence (AI) and generative AI are running high among investors, developers, and occupiers, who rank it among the top three technologies to have the greatest impact on real estate in the next three years.
In particular, the analytical capabilities of AI and its ability to uncover fresh demand opportunities for space are driving the hype train.
With a rapidly expanding AI ecosystem and its supporting infrastructure, there’s little doubt that AI has the potential to transform real estate and stimulate new demand in different markets globally.
We look specifically at five key areas where demand is already emerging.
1. AI clusters in established tech markets
The need for specialised skillsets will only rise with the advent of AI. The war for talent is already driving decision-making for AI companies and investors on where best to establish operations.
Take Australia, where new AI jobs — up to 76% — are concentrated in the two biggest states of New South Wales and Victoria, according to Australia’s first AI human capital index.
Major players such as OpenAI are homing in on established markets globally, often within major technology hubs and in close proximity to top academic institutions, to tap into the pool of AI talent. The ChatGPT developer recently announced London as its first international hub to develop AI technology and policies.
Meanwhile, in Taiwan, electronics manufacturer Wistron built a new plant for AI, 5G, server and computing products in an AI-focused business park in Hsinchu, the city’s main tech hub and home to the world’s top chipmakers.
2. Data centre development
The massive data processing and storage requirements for AI has spurred data centre development.
Globally, the number of hyperscale sites in development is expected to double by 2024, up from 500 sites just five years ago, JLL data shows.
The size of campus builds has likewise grown, with constructions exceeding 100 megawatts becoming more commonplace as the industry rushes to meet the growing hunger for data.
With operators facing pressure to address the environmental impact of these facilities, newbuilds are also getting greener. This is driving a stronger emphasis on sustainability and energy efficiency through technology improvements and the adoption of renewable energy.
3. Smart buildings powered by AI
Many developers are embracing AI-powered buildings as the new standard, relying on intelligent technologies to deliver buildings with high sustainability performance.
Integrating AI with existing technologies such as robotics, drones, and digital humans is helping them to better analyse different parts of the building, while improving feedback and communication with the building and its users.
For instance, Hong Kong’s One Taikoo Place uses AI to identify, interpret, and integrate data from disparate building systems, equipment, and devices, which then allows it to implement predictive maintenance and operational workflow improvements to reap energy savings.
It’s not just office buildings where AI is expected to emerge though. In Australia, data centre operator GreenSquareDC is building the country’s first fully enabled AI data centre which utilises a flexible AI-enabled cooling environment to lower emissions and achieve cost savings.
4. New investment and revenue opportunities
AI is increasingly being deployed to accelerate the pace of transactions and unlock detailed analytics of properties and markets for investors.
The ability of AI to scan data and find meaningful patterns at speed means it can offer valuable recommendations aligned with an investor's objectives, risk tolerance, and market conditions.
A prime example is JLL’s Capital Markets Quants platform powered by AI and machine learning. By analysing data from over 1.25 million properties transacted globally in the past 20 years, the platform predicts real estate shifts and opportunities that support advisors in optimising their clients’ portfolio strategies.
Co-working operators are also finding new revenue streams from AI. Data collected and analysed by AI algorithms can help predict future space demand to optimise energy usage and plan space utilisation more effectively, which potentially opens new doors for expansion.
5. Experience-driven design and space functions
The advancements in AI are transforming the workplace by enabling an improved human experience and a greater degree of personalisation in the office environment.
For instance, in Microsoft’s Redmond headquarters, AI collects and analyses the data gathered from sensors on employees’ behaviour patterns to anticipate needs, and automatically adjusts environmental factors like temperature and lighting based on individual preferences.
A recent study between JLL and neuroscience firm EMOTIV goes a step further by analysing cognitive data to transform workspace design.
What AI is able to do is to connect the cognitive data from users with the physical data on usage patterns and human behaviour, before making sense of it and recommending insights on how we can better augment the workplace experience.
