From Static to Strategic: AI’s Role in Next-Generation Industrial Real Estate

The rapid emergence of generative artificial intelligence (AI) as a powerful and disruptive technology has drawn renewed interest in AI applications for commercial real estate. Many observers have noted that generative AI offers firms new capabilities in financial analysis, market research and customer service. Advances in AI are also expanding the capabilities of other digital and physical technologies and increasing the productivity of physical assets, particularly those in the logistics industry and industrial real estate.

The NAIOP Research Foundation’s 2020 report, “The Evolution of the Warehouse: Trends in Technology, Design, Development and Delivery,” also by Steve Weikal and James Robert Scott, examined how emerging building and logistics technologies were reshaping warehouse and distribution center development and operations. Rapid advances in AI have since accelerated several of the trends observed in the earlier report. The NAIOP Research Foundation commissioned this report to examine how AI is affecting industrial building development and shaping the technological systems within these buildings. The authors reviewed secondary sources and interviewed professionals working in development, logistics, robotics and software development to offer insights into emerging trends that will be of interest to industrial building developers, owners and tenants:

• AI applications for commercial real estate aim to lower costs, shorten timelines and improve outcomes at several stages in the development process, from site selection to building design and interior buildouts.
• Various AI platforms promise to increase the efficiency and output of warehouse and distribution facilities, helping occupiers optimize operational design, increase the productivity of warehouse management and automated systems, and field more advanced robotics.
• Businesses do not need to make large investments in internal databases or specialized talent to use AI effectively. A range of companies now offer off-the-shelf AI products and services for the commercial real estate and logistics industries and to firms of all sizes.
• Developers interested in building warehouses and distribution centers that can support AI-enabled automation such as advanced robotics should prepare for the additional infrastructure needed to support these systems. Typical requirements include additional power capacity and networking infrastructure, power redundancy and enhanced temperature control.
• The net effect of AI on future demand for industrial space remains unclear. More effective automated marketing to consumers and businesses could boost e-commerce sales, but related demand growth could be offset by more efficient building layouts and supply chains.