There's one Blockbuster store left, in Bend, Oregon. It stands as a lonely relic of a company that waited for the future to slow down. Real estate can't afford that posture. We're at the inflection point where people-heavy processes become AI-enhanced operating models, and the gap between early movers and laggards will open quickly.
Going slow is not a strategy.
Why Real Estate is Primed for AI Transformation
Real estate is ideally suited for AI transformation. It's one of the largest asset classes in the world—and one of the most inefficient. The industry relies on workflows that are manual and people-heavy, fragmented across departments and geographies, and dependent on huge volumes of structured and unstructured data.
AI thrives in exactly this kind of environment. It turns those inefficiencies into competitive advantages by automating the mundane, extracting insights from complexity, and enhancing every decision with context and speed.
According to Morgan Stanley, real estate generates more data per dollar of revenue than almost any other sector—but uses very little of it operationally. AI flips this equation, enabling margin expansion without adding headcount. The research firm estimates AI-driven labor automation represents a multi-tens-of-billions opportunity for U.S. REITs and CRE services, on the order of mid-teens percent of operating cash flow.
The intersection of high cash flow upside and high AI adoption potential is where the greatest opportunity lies—and real estate sits squarely in that zone. The commercial real estate industry is already undergoing structural shifts from institutionalization to new investor expectations and hybrid work patterns. AI supercharges these shifts.
The Three Waves of AI Transformation
Near Term (0-12 months): AI Assistance
Put AI in the work, not on the slide. Pick the repetitive, high-volume tasks everyone complains about—drafts, lookups, triage—and put a copilot next to the human who does them. This is the "assist" era, where humans approve or edit, then ship the work the same day.
Medium Term (12-36 months): AI Orchestration
Instead of one helpful tool, run several agents that talk to each other: one watches service levels, one tunes pricing and exposure, one cleans data and reconciles. Humans sit in review, exception, and relationship seats. The wins start stacking—cycle times, renewal capture, conversion quality.
Longer Term (~5 years): AI-Native Operating Models
Work doesn't disappear; it reassigns. We'll have fewer coordinators and more operators who direct systems. Micro-agents do the routine work; people do the judgment work. The jobs-to-be-done remain, but fewer people do more valuable versions of them.
Where AI Will Transform Real Estate Operations
Investments: The Obvious Starting Point
Most firms will naturally focus here first because buying and selling the right assets at the right time drives returns. Expect significant automation in due diligence, underwriting, and market analysis as AI processes vast amounts of market data to identify opportunities and risks faster than human analysts ever could.
The "Big 3" Cost Centers: Where the Real Opportunity Lives
While investments grab headlines, the biggest operational impact will come from the three largest cost centers: asset management, property management, and leasing. These areas have traditionally operated with lower margins and heavy manual processes—making them ideal for AI transformation.
Asset Management will see far more automation in budget and business plan tasks. AI will continuously monitor portfolio performance, predict maintenance needs, and optimize capital allocation across properties.
Property Management represents a fundamental shift in skill sets. Property managers will evolve from handling repetitive administrative tasks to focusing on tenant satisfaction and services. AI will handle work order routing, vendor coordination, and compliance tracking, freeing PMs to build relationships and solve complex tenant needs.
Leasing will benefit from better lead routing, easier access to high-quality market data that informs negotiations, and the elimination of manual data entry. Brokers will spend more time chasing better leads and less time on administrative work.
The VTS Advantage: Built for the AI Era
This transformation requires more than generic AI tools—it demands platforms built specifically for real estate's unique challenges and workflows. VTS has been building this foundation for over a decade, collecting, organizing, and standardizing real estate data across thousands of properties and millions of square feet.
When a general AI model analyzes a lease, it might catch obvious red flags. VTS AI spots patterns across entire portfolios—how certain tenant types respond to specific lease structures, or how market conditions in one submarket predict demand in another. This is what Bessemer Venture Partners calls the "knowledge compounding effect," where each interaction deepens understanding and creates more value over time.
The best AI isn't a separate tool you remember to use—it's embedded invisibly into existing workflows. VTS AI enhances the leasing, asset management, and portfolio optimization processes already in use. When reviewing lease proposals, it automatically flags unusual terms. When planning capital improvements, it suggests optimal timing based on lease schedules and market conditions. When setting rental rates, it provides market-informed recommendations based on comparable properties and demand signals.
We're launching our first AI products this year, including an AI Copilot for support and embedded intelligence across key modules. These capabilities help reduce churn, grow account value, and expand into broader budgets within our customer organizations.
Our AI strategy isn't a bolt-on feature—it's core to our mission of becoming the default operating system for the built world. As Morgan Stanley highlights, AI-native systems create compounding value: each interaction improves future predictions, retention, and monetization. Early movers will build enduring competitive moats.
The Choice Ahead
The firms that treat AI as an operating capability will pull away on cost, speed, and experience. The rest will find themselves with great locations and perfect signs, but business models the world has moved past.
We know the moves. We've said them out loud. The question isn't whether AI will transform commercial real estate, it's whether you'll be leading that transformation or playing catch-up.
The future won't slow down for anyone. But for those ready to move with urgency, the AI revolution in real estate represents the opportunity of a generation.
Unless otherwise noted, statistics are from Morgan Stanley Research - How GenAI May Reshape the Real Estate Industry (July 1, 2025) and its companion podcast note.
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