Real estate pros must adapt as AI educates the market

By LEO FARRELL //

For decades, the Long Island commercial real estate market operated under a strict informational hierarchy.

Landlords, sellers and developers controlled the concrete and steel, while traditional brokerage firms guarded much of the critical intelligence required to lease and sell their properties. Exclusive access to information – proprietary tenant lists, historical lease concessions, sales comparables, off-market submarket trends – gave brokers a significant advantage.

The rapid adoption of artificial intelligence among Nassau and Suffolk property owners, particularly those with corporate-owned properties, is beginning to disrupt this traditional model. Equipped with increasingly sophisticated analytical tools, Long Island landlords and sellers are using AI to evaluate market conditions, assess opportunities and challenge the information provided by their brokers.

Because Long Island’s commercial real estate market varies widely – from transit-oriented developments and office buildings to retail centers, small industrial properties and large distribution facilities – regional averages are rarely sufficient for important real estate decisions. Historically, landlords and sellers depended on experienced local brokers to provide the qualitative, on-the-ground knowledge needed to evaluate property pricing, amenities, existing conditions and financial viability – data that’s now coming fast.

“We’re using purpose-built AI tools to process data that used to take weeks to assemble – municipal zoning codes, lease and sales comps, tenant improvement costs,” noted David Hercman, director of asset management at Syosset-based Milvado Property Group. “It doesn’t replace our brokers, but it means we come to the table with our own view of the market.”

These systems can evaluate a range of factors – including property taxes, zoning regulations, utility costs and market conditions – to help owners develop leasing and sales strategies. According to Ted Stratigos, principal and managing director at Avison Young in Melville, “The data asymmetry that protected traditional brokerages is actively being challenged on Long Island.”

“Landlords are no longer waiting for quarterly market brochures that are already outdated by the time they hit the printer,” the veteran commercial broker added. “They are executing simulations to model exact data based on shifting localized factors.”

The increasing accessibility of market information is forcing commercial real estate brokerages on Long Island to reconsider how they demonstrate value to their clients. To remain competitive, forward-thinking brokers are moving beyond simply providing access to market data and placing greater emphasis on strategic advisory services, with major firms integrating specialized software to automate routine administrative tasks – allowing their professionals to focus on the human considerations that technology cannot replicate.

“AI can spot the mathematical patterns in long lease datasets, but it can’t sit at a lunch table in Garden City and build trust,” noted Daniel Weiner, a veteran industrial broker at CBRE in Melville. “A machine cannot navigate the delicate corporate politics of a family-owned distribution business, nor can it read the room during a tense multi-party boardroom negotiation when environmental or other issues crop up on a site.”

The relationship between property owners and the brokerage community is undergoing significant transformation. Landlords and sellers are no longer entirely dependent on outside brokers for access to market information and industry contacts.

A recent article from SF AI Labs argued that AI will not replace commercial real estate brokers, but suggested that this simplified answer overlooks the ways technology is already changing the profession.

A commercial real estate transaction is ultimately a negotiation between parties built on relationships and trust. Most commercial landlords retain brokers not simply because they can’t search a listings database themselves, but because they need market knowledge, negotiating experience and professional judgment. A broker helps close the gap between access to information and the ability to use it effectively.

Artificial intelligence can assist with analysis, but it doesn’t possess professional accountability or the ability to navigate the human dynamics of a complicated negotiation. Local knowledge represents another important distinction. Commercial real estate is highly localized. Zoning boards, entitlement risks, landlord reputations, negotiating histories and the differences between individual submarkets can all influence a transaction.

The question is no longer whether landlords and sellers will implement AI strategies – many already are. The challenge is whether commercial real estate brokers are prepared to respond with up-to-the-minute pitch decks. Brokers are beginning to recognize that these technologies are already influencing client expectations and that the trend is likely to continue.

The future of commercial real estate brokerage depends not on resisting technology, but on combining its capabilities with the experience, relationships and professional judgment that remain essential to successful transactions.

Leo Farrell is a member of the Executive Board of the Commercial Industrial Brokers Society of Long Island and a principal at Avison Young.