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Artificial intelligence can be a useful tool for commercial real estate brokers and property owners, but risks may offset rewards if users aren’t careful.
Predictive analytics, smart maintenance, chatbots, market analysis and expense optimization are all areas where AI can help a business increase efficiency.
AI tools also can provide a time-saving means of tenant screening, credit screening and employee screening during the leasing and hiring processes.
But be aware: “If you couldn’t do before you began using your AI product, you can’t do it now,” warned Katarina “Kate” Polozie, partner at Woods Oviatt Gilman and practice leader for the data privacy and data security groups.
That’s especially important to remember if AI has been implemented to reduce human hours devoted to tenant and employee screening. The AI program may unintentionally discriminate, and the ultimate responsibility will rest with the user.
“You can be liable for what your chatbot provides,” Polozie said.
Indeed, AI results may not be factual or meet legal requirements.
“They’re driven to tell you want you want to hear,” Polozie told a gathering of NYSCAR members at the organization’s monthly meeting hosted by WinnCompanies at Sibley Square. “They sound real, you want to believe it, but they may not be real.”
She advised that if you’re using AI for screening, be sure bias tests are implemented on a regular cadence to ensure results are compliant with anti-discrimination laws.
“You need to keep a human in the loop,” Polozie said.
AI also can be used to ease the burden of tedious and manually intensive tasks when drawing up commercial leases. There often are competing forms; AI can sift through them all, pointing out possible pitfalls in each form and identify cross references for missing exhibits, said Kris Vurraro, a partner in the Woods Oviatt Gilman real estate and finance department with a concentration on commercial leasing.
But AI is not a tool for lease negotiations.
“AI lacks any contextual knowledge,” Vurraro said, adding that AI doesn’t know the client and doesn’t know who has leverage in a negotiation. Thus, the human element is essential.
If you’re selling a property or listing an apartment for lease, photographs are an essential component. Buyers want images of the building. Tenants want to see the living space and amenities within a building.
Don’t rely on AI to generate an image, though. There’s no way to know where AI found the image or who may own the rights to that image, so you could end up facing a legal battle for using a photograph without permission, Polozie warned.
There are even more frightening AI-associated fears, however. Wire transfers are common in completing transactions, and AI is providing the criminal element with enhanced tools.
A bad actor using generative AI only needs a 30-second recording of your voice – found anywhere, really – to create a spoofed audio recording that’s virtually impossible to determine is fake, Polozie said.
Thus, if you receive a call with a late change of instructions regarding a wire transfer, alarm bells should sound. Don’t just assume the voice you hear is legitimate.
Polozie and Vurraro advise AI users to have a deep understanding of how their product works, and will work in the future.
Just because the fine print says data won’t be retained today doesn’t mean the vendor won’t alter terms of use at a later date and keep your data, even if you’re paying for the service. Legal advice would be wise when considering a certain product, they said.
Users also need to know if the AI model is closed or public, and also if terms and conditions of use can be changed.
“Paid does not mean private in the way you want it to,” Vurraro said. “It can, but you should not assume that it does.”
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