United States: Wave Of The Future: The Effect Of AI And Robotics On Commercial Real Estate

Various areas of commercial real estate stand to experience significant changes in the coming years as artificial intelligence (AI) and other technological advances change the ways businesses carry out their day-to-day operations. One of the greatest advancements in AI is the emergence of industrial robots capable of autonomous and intelligent action. Advancements in AI enable robots to employ complex motion planning, and, when coupled with other emerging technologies, such as visual detection, may eventually result in a significant decrease in the demand for traditional human labor. In recent years, a number of major retailers and other business have begun to expand the role of AI and other technologies in their operations. For instance, Amazon has invested heavily in automating its fulfillment centers, and JD.com, in connection with Mujin, has recently rolled out the first completely humanless warehouse, in Tokyo.

The integration of robots and other AI into larger networks via the internet and other connectivity portals, generally referred to as the "Internet of Things" or " IoT", highlights additional considerations in real estate and other markets, as businesses and property owners consider the benefits and drawbacks that accompany these new technologies. Because the internet is more widely available and the cost of connecting and computing is decreasing, entire networks of connected "things" and people can be created. This network, the IoT network, is capable of providing large-scale, real-time data that stands to have a profound impact on how commercial real estate professionals manage and operate their properties.

Property Management

Usage of IoT in commercial real estate has grown significantly in recent years. It has been said that if a commercial building is not "collecting, storing, using, and learning from data", then the building is not maximizing its competitive advantage. Buildings are operated through a system of facility devices: security systems, lighting, HVAC, elevators, etc., and if such systems can be connected to a larger network of devices, as well as the personal devices of tenants or patrons, valuable data can be analyzed and used to maximize competitive advantages to a degree that has not previously been possible.

Connecting a building's operation system with the IoT creates more sophisticated networks, enabling centralized and customizable control of a building's operations. Everything from turning off appliances, controlling HVAC, and even monitoring air quality, can be controlled via connections to the internet. Facilities like street lights and utility meters can be linked to the building, devices and the internet, providing the owner with greater means to remotely monitor and control all that happens in the building. A unified, aggregated platform for communication and analysis enables owners to improve performance, maximize occupancy, and increase tenant satisfaction.

The optimization capabilities of the IoT combined with the cost-saving force of robot-driven labor may cause a shift in our understanding of how a warehouse facility is managed. Facilities will be connected with customers through new channels and platforms, allowing tenants to meet the increased expectations of their customers. Owners will also be able to customize services for their tenants, which could also decrease vacancy risks.

Market Expansion

A world where robots replace humans in performing simple tasks like lifting, moving, and sorting inventory in warehouses is no longer pure science fiction. Robots are already being put to use in warehouses across the globe, pulling crates, sorting inventory and completing a multitude of other tasks that have generally been performed by hourly workers.

Although the current technology is still developing, warehouses from China to Britain are racing towards full automation. Robots can not only perform basic labor functions, such as moving inventory and operating forklifts, but also complex tasks like mapping pipes inside walls and monitoring subtle changes in temperature. Technology has enabled robots to not only fill positions traditionally held by human workers, but also to do more, 24 hours a day, 7 days a week, without risk of exhaustion or injury.

With the demand for human labor decreasing, companies may consider more remote options where both land and operating expenses will be cheaper. In turn, certain markets that might traditionally not be in the running for significant commercial real estate investments (for instance, rural or agricultural areas) may become more competitive with the rise of AI implementation in business. For example, if there is no need for readily available public transportation for the workforce or for nearby housing options, a busy warehouse could be placed in rural North Dakota, where the land and operations are more affordable than in metropolitan areas. In this way, AI and the implementation of robotic workforces may lead to opportunities for underdeveloped markets to grow exponentially in the coming years.

Predictive Maintenance

Most properties currently rely on what is known as preventive maintenance, meaning that facility managers conduct periodic inspections, as recommended by industry norms or required by law. With the implementation of newer technology, AI and the interconnectivity of the IoT, however, larger and more accurate data sets can be more readily available, which may shift the model to one which leans more heavily on predictive maintenance. Property owners and building managers may be able to more accurately predict when maintenance will be required, resulting in far less disruption to commercial activities and greater control over maintenance budgets. Another, albeit slightly less tangible, benefit to predictive maintenance is that we may eventually see a decreased need for the types of complicated calculations for operating expenses and maintenance costs that are often needed in today's commercial leases.

Environment and Safety

Robotic devices can check, measure, and monitor environmental qualities using various interconnected sensors throughout a project or network of buildings. These devices can do things that humans cannot, like use ultrasonic waves to map pipes or read the body temperature of patrons walking into an elevator. With the ability to measure and monitor the people and environment around and inside a building, the overall environment can be kept healthier and more comfortable. Accurate detection of air particles and temperature can reduce the spread of airborne diseases during flu season. Security systems from a building two blocks away can activate safety devices and keep tenants safe. In the middle of the night, detection of high temperatures from an overheated machine can prevent a fire from spreading.

The improved capabilities of robots and the IoT to monitor, inspect, and repair equipment also pave the way for the introduction of prefabricated components into industrial warehouse spaces. Prefabricated components ensure faster and more cost-effective construction, and reduce construction waste and time. Heavy equipment can be replaced with sensors that can be controlled using indicators like vibrations or temperature fluctuations. Greater inspection, tracking, inventory, and safety capabilities save energy, time, and costs for developers, investors, construction companies, and lenders. Additionally, decreased risks in these areas may change the way that certain types of insurance and indemnities are handled in the real estate arena. Today's standard commercial leases often include many pages of complicated language dealing with risk of loss, insurance and casualty, but newer technologies promoting safety and security may reduce the need for some of these items or may change the way such provisions are written and negotiated.

Data Centers and Power Grids

Of course, not all of the implications of AI and IoT on the commercial real estate market are immediately positive. There are also a number of potential drawbacks and stumbling blocks that will have to be explored as these technologies are integrated into business. A greater reliance on the internet and network integration of devices means that cybercrimes and hacking pose a more tangible risk to AI-friendly businesses, with much higher stakes. As robotics advance and the IoT makes "Smart Buildings" the norm, digital, cyber, and physical security of devices will need to increase in sophistication and complexity.

Additionally, concerns about the availability and infrastructure of power grids and data centers may become more prevalent. Increased usage of robots, security and monitoring devices and other equipment and facilities within the IoT universe will almost certainly result in an increased need for data and power centers to provide the bandwidth and electricity for these advancements to function. Because data centers must survive power outages, they must be built with independent feeds from more than one power grid, which makes location and land critical. Data centers and power plants are expensive to build and require sophisticated negotiation of leases, contracts and other documentation, which could have a meaningful impact on the legal profession as it relates to commercial real estate.

Looking forward

Advancements in AI robotics and integration with the IoT have the potential to change the way that commercial properties are owned, leased, managed and operated in the future. Large scale access to real-time data will enable owners and operators to increase efficiency and cut costs through predictive maintenance, analytics, and tailored tenant services. This data will likely drive development and investment decisions and amplify the demand for security services, data centers, and increased access to power sources, and may even change, to some extent, the roles that are currently played by various real estate professionals, including property managers and lawyers.  The rise of smart buildings may give way to the emergence of smart cities, making what was once science fiction an entirely new reality, and the full effect on today's real estate market remains to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions