The Discussion: Navigating the Intersection of Technology and Commercial Real Estate
Introduction:
The world of commercial real estate is undergoing a transformation driven by technology and artificial intelligence (AI). In a recent episode of “America’s Commercial Real Estate Show,” show host Michael engages in a conversation with Michael Mandel, CEO of CompStak, to explore the impact of technology on the industry. The discussion touches upon the role of AI, the challenges faced by commercial real estate professionals, and the evolving landscape of data utilization.
Technology Funding in Commercial Real Estate:
Bull initiates the conversation by addressing the substantial investments in technology within the commercial real estate sector. Mandel acknowledges the continued funding but highlights a shift in the market dynamics. The focus has moved from the previous mantra of “growth at all costs” to building sustainable companies. Mandel notes that this change affects various companies, separating those that are sustainable from those facing challenges.
Impact of Economic Factors on Technology Companies:
As the conversation unfolds, Mandel acknowledges the impact of economic factors on technology companies serving the commercial real estate sector. The slowdown in transaction volume has repercussions for technology providers as their clients, major commercial real estate owners, face financial challenges. Mandel emphasizes the need for technology companies to adapt and support their clients during these challenging times.
Data Sources and CompStak’s Unique Approach:
Bull raises the issue of the multitude of data sources in the market and the potential confusion for customers. Mandel explains CompStak’s unique approach to data sourcing – crowdsourcing. With a network of 35,000 commercial real estate brokers, appraisers, and researchers, CompStak incentivizes users to share exclusive data. This approach allows them to offer granular and proprietary information, differentiating themselves from providers that rely on repackaging publicly available data.
The Role of AI in Commercial Real Estate:
The conversation pivots to the role of AI in commercial real estate. Mandel distinguishes between large language models, highlighting the prevalence of models like ChatGPT. He outlines CompStak’s early adoption of AI, leveraging machine learning and other AI forms in their operations. The discussion emphasizes that AI’s effectiveness relies on the quality and quantity of data underlying these models.
CompStak’s Approach to AI and Data Validation:
Mandel sheds light on how CompStak uses AI for data validation and normalization, emphasizing the human-in-the-loop model. Analysts review flagged information, ensuring accuracy, and validating data through direct contacts with brokers or information providers. Mandel acknowledges that while not infallible, the iterative process of data validation contributes to enhancing the overall reliability of their datasets.
Expanding Data Sets and the Launch of CompStak One:
CompStak’s evolution is discussed, with Mandel detailing the expansion of data sets over the years. He introduces CompStak One, a newly launched product integrating lease comp data, sales comp data, property data, and even loan data. The goal is to provide users with a comprehensive and contextualized view of the commercial real estate landscape, facilitating better decision-making.
Encouraging Adoption of AI for Non-Geek Users:
Bull seeks advice for non-technical users on adopting AI. Mandel encourages experimentation, recommending tools like ChatGPT and image creation tools. He emphasizes that while not every aspect may be valuable, users may find elements that save time and effort. The key is to explore and decide what adds value to one’s specific workflow.
Embracing Innovation in Commercial Real Estate:
In the concluding remarks, Mandel urges professionals in the commercial real estate industry not to shy away from technology. He highlights the shift from a competitive advantage to a competitive disadvantage for those who resist embracing available data and technology. Mandel encourages a proactive approach, embracing innovation, and leveraging tools that can enhance efficiency and decision-making.
Conclusion:
The conversation between Michael Bull and Michael Mandel provides insights into the changing landscape of commercial real estate, driven by technology and AI. As the industry navigates economic challenges, technology companies like CompStak continue to play a pivotal role in supporting clients and shaping the future of the sector. The integration of AI, data validation practices, and the launch of CompStak One showcase a commitment to innovation and a comprehensive understanding of the evolving needs of commercial real estate professionals.