Artificial intelligence (AI) is reshaping how real estate deals are analyzed, underwritten, and executed. In this Q&A, we learn more about Andy Hochberg’s views on AI in the real estate industry and practical ways Next Realty is using the technology.
How is Next Realty leveraging AI in its business operations and investment strategy?
In 2024, Next Realty invested in Placer.ai, a national, subscription-based technology service that provides AI-generated data to track consumer retail traffic patterns. As anticipated, we use the technology to guide our assessments of potential acquisitions and leasing strategies. We often look to Placer’s data on changes in traffic patterns, including the number and length of visits to a retail center, to guide leasing decisions.
Our assessments continue to rely on strong industry relationships and rigorous due diligence, but Placer is a key tool in our property evaluation process. For instance, Placer provides a reliable visitor overview for most assets we evaluate by providing metrics such as estimated customer visits over a 12-month period, total visitor counts, visit frequency, year-over-year visit trends, visit count comparisons, customer demographic summaries, and market-landscape heat maps.
Placer data can also provide helpful information when we’re assessing potential investment properties. We recently passed on a potential acquisition in Ohio after reviewing the Placer data and discovering that one of the tenants was suffering declining comparable store sales. The business filed for Chapter 11 bankruptcy a few weeks later, and accessing the Placer data saved us considerable time evaluating the property.
We are also learning and deploying additional AI tools for administrative tasks and integrating AI tools into operations. For instance, we can use Claude to create abstract tenant leases and access research data in the Yardi system.
I don’t claim to be a tech expert, but I do think AI is a useful starting point when we’re digging into something. If a new project pops up down the street from one of our properties, I can get up to speed on it in seconds. That said, we treat AI more like a reference than a source of truth—it helps frame the analysis, but it’s not what drives the final call.
How is AI changing the deal process?
Because AI can provide information so quickly, the diligence process has been compressed. However, because detailed property information is widely accessible, the pool of potential buyers has grown, making the transaction process more competitive.
Since its launch, Placer data has become ubiquitous in the industry, and brokers frequently include the data in a property’s Offering Memorandum – if the data is favorable, of course! In that way, the inclusion – or exclusion – of Placer data can serve as a litmus test to assess whether a potential property passes the initial threshold criteria.
How is Next Realty differentiating itself in the world of AI?
When I recently visited a potential property in Florida, I was surprised by the selling broker’s comment that few CEOs visit potential properties and, instead, rely on Google Earth to “see” the property. As CEO, I consider it my responsibility to be actively engaged in properties to honor the commitment I’ve made to our investors. I don’t ever plan to be a CEO who delegates property visits to technology. It’s important to recognize the limitations – as well as the strengths – of AI. AI won’t replace the importance of personal connections. Iterative conversations and networking opportunities continue to be not only beneficial but essential. We can use AI to quickly access detailed information on properties, including detailed demographics of the geographic area and surrounding properties, but this information can’t provide the nuanced assessment that comes from decades of personal experience and wisdom.
