The commercial real estate industry is on the cusp of a major transformation with the introduction of ChatGPT. This powerful language model, based on the GPT-3.5 architecture, is poised to revolutionize the way that brokers, investors, and property owners interact with data and make decisions.
With its ability to analyze vast amounts of information and generate insights in real-time, ChatGPT has the potential to significantly streamline and accelerate the commercial real estate process, from property searches to lease negotiations. In this article, we’ll explore how ChatGPT is changing the face of commercial real estate, and what this means for the industry as a whole.
We will be using Chat GPT-3 throughout this article.
First, let’s break down ChatGPT’s capabilities. Who better to ask than ChatGPT itself?
Me: What are ChatGPT’s capabilities at this moment in time?
ChatGPT: As of my knowledge cutoff of September 2021, ChatGPT is a state-of-the-art language model with a wide range of capabilities. Some of its current capabilities include:
- Language understanding: ChatGPT is capable of understanding natural language input and generating responses that are contextually relevant and grammatically correct.
- Text completion: ChatGPT can complete sentences or entire paragraphs based on a given prompt or input.
- Translation: ChatGPT is capable of translating text from one language to another.
- Summarization: ChatGPT can summarize lengthy pieces of text into shorter, more digestible formats.
- Question answering: ChatGPT can answer questions by extracting relevant information from a given body of text.
- Sentiment analysis: ChatGPT can analyze the sentiment of a given piece of text to determine whether it is positive, negative, or neutral.
- Text classification: ChatGPT can classify text into predefined categories based on its content.
These capabilities make ChatGPT a powerful tool for a wide range of applications, including customer service, content generation, and data analysis. However, it’s worth noting that ChatGPT is still an evolving technology, and its capabilities may continue to improve over time.
These are in line with what ChatGPT-3 can do, but ChatGPT-4 has been released in the paid version and has more advanced capabilities.
According to Open AI, “GPT-4 is a large multimodal model (accepting image and text inputs, emitting text outputs) that, while less capable than humans in many real-world scenarios, exhibits human-level performance on various professional and academic benchmarks” and “ it passes a simulated bar exam with a score around the top 10% of test takers; in contrast, GPT-3.5’s score was around the bottom 10%.” Ultimately, “GPT-4 is more reliable, creative, and able to handle much more nuanced instructions than GPT-3.5.”
Open AI also made GPT-4 available as an API (Application Programming Interface) for developers to build applications and services. ChatGPT APIs allow developers to integrate ChatGPT’s capabilities into their own applications and software. This will be pivotal for ChatGPT as it makes integrations readily available to the general public and can significantly enhance the software we are already using.
We will likely start to see these APIs integrated into the software we use every day from CRMs to simple Word documents and emails. ChatGPT will likely transform the way we communicate and streamline processes.
While ChatGPT is a powerful tool, it also has some limitations to consider regarding accuracy, its training data cutoffs, and more. I’ll let ChatGPT explain it best:
Me: What are ChatGPT’s limitations?
ChatGPT: As an AI language model, ChatGPT has some limitations that are important to consider. Here are a few key limitations:
- Lack of common sense knowledge: ChatGPT has access to a vast amount of data and can generate text that is coherent and grammatically correct. However, it lacks common sense knowledge that humans have acquired through experience and observation, which can sometimes lead to nonsensical or inaccurate responses.
- Inability to understand context: While ChatGPT can understand the context of a conversation to some extent, it may not always fully grasp the nuances of a particular situation, which can result in inappropriate or irrelevant responses.
- Bias: ChatGPT is trained on large datasets of human language, which means it can reflect any biases present in the data. This can lead to discriminatory or stereotypical responses.
- Limited understanding of visual information: ChatGPT is primarily a text-based model, which means it has limited ability to understand visual information such as images or videos.
- Privacy concerns: ChatGPT requires access to user data in order to function, which can raise privacy concerns for users who are not comfortable sharing their data with third-party providers.
It is important to recognize these limitations when using ChatGPT, and to use it in conjunction with other resources and expertise, particularly in areas where human judgment and decision-making are critical.
Me: What date is your data from?
ChatGPT: My knowledge cutoff is from September 2021, which means that my training data and information sources are up to that point in time. However, I continue to learn and update my knowledge through interactions with users and access to new information sources.
Be sure to keep these things in mind when you are using the tool. Inaccurate data and information can be harmful in most circumstances.
With the aforementioned launch of ChatGPT-4, we will likely be seeing less mistakes and more accurate information in the paid version as well as any integrations.
How Will ChatGPT Change Commercial Real Estate?
So let’s get down to the real question.
Me: How will ChatGPT affect commercial real estate?
ChatGPT: As an AI language model, I don’t have the ability to predict the future with certainty, but I can offer some insights based on current trends and observations.
In terms of commercial real estate, ChatGPT might have some impact in the following ways:
- Streamlining communication: Commercial real estate involves a lot of communication between different parties, such as tenants, property owners, brokers, and contractors. ChatGPT can potentially streamline these interactions by providing instant responses to common queries and assisting with basic administrative tasks.
- Enhancing customer service: With the help of ChatGPT, commercial real estate companies can offer 24/7 customer support, which could improve tenant satisfaction and retention.
- Improving decision-making: ChatGPT can assist in data analysis and predictive modeling, which could help property owners and developers make more informed decisions about leasing, pricing, and investments.
- Reducing labor costs: ChatGPT can automate routine tasks, such as answering FAQs, scheduling appointments, and sending reminders, which could reduce labor costs and free up employees to focus on more complex tasks.
Overall, the impact of ChatGPT on commercial real estate will depend on how well the technology is implemented and integrated into existing workflows. While it has the potential to offer significant benefits, it is unlikely to replace human expertise and experience entirely.
A little bit…vague. Let’s try something else.
Me: Will ChatGPT replace commercial real estate brokers?
ChatGPT: It is unlikely that ChatGPT will completely replace commercial real estate brokers, as brokers play a critical role in the industry. Brokers provide specialized expertise and market knowledge, and they can offer personalized advice and guidance to clients. Additionally, commercial real estate transactions can be complex and require negotiation skills and legal expertise that ChatGPT may not be able to provide.
However, ChatGPT can supplement and enhance the services provided by brokers. For example, it can assist with basic administrative tasks, provide instant responses to common queries, and even offer data analysis and predictive modeling. This can free up brokers to focus on more complex tasks, such as client relationships and deal negotiation.
Furthermore, ChatGPT can help brokers to reach and engage with clients more effectively, particularly through online channels. By leveraging ChatGPT’s ability to offer 24/7 customer support, brokers can provide a more responsive and convenient service to clients, which could enhance their reputation and attract more business.
In summary, while ChatGPT has the potential to enhance and streamline some aspects of commercial real estate transactions, it is unlikely to replace the specialized knowledge and expertise provided by brokers. Instead, it is more likely that ChatGPT will be used as a tool to assist brokers in their work and to provide better customer service to clients.
With Chat GPT, it’s likely that brokers who know their market best will come out on top. Chat GPT (for now) is learning from outdated or slow information. Knowing about off-market properties and highly tenant-specific market information will set brokers apart from Chat GPT.
But, with the rise of Chat GPT integrations, we will likely see Chat GPT used as a tool to speed up and streamline the processes related to lease negotiations.
Me: How can office building owners use Chat GPT to lease their buildings quicker?
ChatGPT: As an AI language model, ChatGPT can provide assistance to office building owners in several ways to lease their buildings more quickly. Here are a few suggestions:
- Chatbot: Building owners can create a Chatbot using ChatGPT to engage with potential tenants and answer their queries. The Chatbot can be programmed to answer frequently asked questions about the building, its features, and available spaces, providing a more efficient and personalized experience for tenants.
- Customized Listings: Office building owners can create customized listings for their building using ChatGPT that highlight the unique features and amenities of the building. These customized listings can be used to promote the building on commercial real estate websites or social media platforms, helping to attract more potential tenants.
- Data Analysis: ChatGPT can be used to analyze data from various sources to identify trends and patterns in the commercial real estate market. This data can be used by building owners to make informed decisions about rental rates, amenities, and lease terms, helping to attract more tenants and increase occupancy rates.
- Language Translation: ChatGPT can be used to translate listings, brochures, and other marketing materials into different languages to reach a wider audience. This can be particularly useful in markets where there are a significant number of non-native English speakers.
- Personalized Recommendations: Building owners can use ChatGPT to provide personalized recommendations to potential tenants based on their specific needs and requirements. For example, if a tenant is looking for a building with a large open floor plan, ChatGPT can provide recommendations for buildings that meet that criteria.
It is important to note that while ChatGPT can be a useful tool for office building owners to lease their buildings more quickly, it should not be used as a replacement for human interaction. Personalized communication with potential tenants and brokers is still crucial to building successful leasing relationships.
Again, owners and brokers who know their market best will come out on top. ChatGPT will likely never be able to accurately track active deals in the market since that information is generally kept under wraps.
Can ChatGPT help tenants find office space? Find out in our article: Putting ChatGPT to the Test: Can AI Find the Perfect Office Space?
So…with all that said, how will ChatGPT affect the commercial real estate industry? In my opinion, it’s too early to tell. But, if you aren’t already experimenting with it and using it to streamline tasks, you are behind the curve.
New versions of ChatGPT are being released rapidly and each version gets better and better. With APIs and new applications being widely created and used, we will likely see the use of ChatGPT completely transform over the coming years (and maybe even months). While ChatGPT may never fully replace the human touch in commercial real estate, it will undoubtedly play a pivotal role in shaping the industry for years to come.
Have another CRE question you want us to test out? Email me and we will put it to the test!
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