Companies’ usage of artificial intelligence technologies is tinting almost every imaginable corporate discipline in one way or another. Here is one casual observers may overlook: real estate management.
Among 1,000 high-ranking executives surveyed by Censuswide on behalf of workspace solutions provider International Workplace Group, 60% said AI has made it more difficult to predict how much office space they will need over the next two years.
Nearly three-quarters (73%) of the executives, all CEOs or CFOs in the United States and U.K., said technological change, including AI, has made their organization less willing to commit to long-term leases or traditional real estate solutions.
And almost everyone polled — 99.8% of them, to be precise — said they are actively transitioning real estate costs from fixed to more variable.
“With rapidly advancing technology transforming productivity, workforce planning and business velocity, leaders are moving … toward capital-light workspace strategies that can scale with changing demand,” IWG said.
As to how AI is influencing decisions around office space locations, a plurality of executives pointed to AI enabling more remote working.
A majority of those surveyed are investing in hybrid workspace setups (57%), establishing work locations closer to where employees live (55%) and considering decentralized workspace models (52%).
Virtually all (99%) of the executives said cost reduction is a driver in deciding where to locate office space, and more than a quarter (27%) said it’s their most significant driver.
“Nobody knows exactly what their organization will look like in two years’ time, but they do know they need the agility to respond,” said Christian Schmitz, CEO of International Workplace Group.
Meanwhile, another survey from commercial real estate and investment management firm JLL found that only 15% of the 2,200 participating C-suite executives and corporate real estate leaders across 21 countries had progressed beyond initial deployment to actively optimizing AI in their real estate operations.
Almost half (46%) of the surveyed leaders said they were actively monitoring AI trends, and 40% were analyzing implications for their real estate function. However, just 33% said they were actively modeling the potential effects on their portfolios across locations and asset types.
“This gap reflects the complexity of assessing the impact of a technology still in the early stages of enterprise adoption, where the effects on the workforce are unclear and most companies remain in evaluation mode,” JLL wrote in its research report.
The more advanced organizations aren’t more certain of their future than the others, according to the report. Rather, JLL said, they develop agile planning to bridge AI's rapid cycles with CRE's longer-term commitments.
