CRE Firms Ready to ‘Get Data Right’ in 2025

Time to look back on tech predictions for 2024 and provide fresh ones for the year ahead.
Looking back on those that I made last year, it appears that my average improved, with two out of three predictions playing out. I believed that we would continue to see momentum behind artificial intelligence and generative AI initiatives; I thought we’d see strong traction in smart-building initiatives as owners, operators and investors focused on sustainability improvements in existing assets; and I expressed pessimism that we would see truly transformational initiatives as real estate firms continued to take a conservative stance on spending amid continuing revenue challenges. I think the first and last predictions were proven out, but investments in smart-building technologies did not show up in the way I was expecting. And, if I’m being honest, the AI and generative AI investments have been less robust than I expected.

For this year, I’m going to double down on my enthusiasm for AI, particularly given results from Deloitte’s latest industry survey and actual traction with client projects. I’m going to back off my enthusiasm for smart-building investments. I think that’s a matter of when rather than if, but given current momentum, I’m not sure we’ll see much progress in 2025. I do, however, think we’re going to start seeing more business transformation efforts in the industry, particularly for the investment managers among you, and that transformation will be focused on data initiatives.

I’ve taken up plenty of column space writing about real estate AI solutions over the past 18 months, and I think justifiably so. Interest in applied solutions is growing and there has been a shift from conversations about the art of the possible to actual implementations. In financial use cases for AI (financial planning and analysis, risk management and internal audits, reconciliations), we’re seeing actual progress made in initiatives related to lease abstraction and document research. I expect as real estate firms see others adopt GenAI-based leasing and contract solutions, widespread adoption could become the norm, and we’ll likely see significant progress toward this in 2025. I’ve seen these solutions in action—they’re already very good and are expected to get better very quickly.

For business transformation projects, more than 80 percent of companies surveyed in connection with Deloitte’s annual commercial real estate outlook expected to increase spend on technology-related initiatives in 2025. This is significantly up from the last two years of conservative spend (responses to the same question were 35 percent last year and 40 percent in 2022), and we’re seeing signs that firms are investing in data initiatives. In some cases, real estate firms seem to have the resolve and intent to “get it right” this time. In any case, given interest, I expect to see many firms get their data act together or make real progress in the year ahead.

With the SEC staying its reporting requirement for sustainability, interest among firms on path-to-net-zero activities, smart-building initiatives and compliance-driven reporting initiatives is waning. For companies with a global footprint or properties in California or New York, interest remains, but momentum has certainly slowed. While there are strong business cases to be made associated with improving the environmental performance of existing properties and portfolios, and an interesting new wave of smart-building-related proptech solutions, I just don’t see the sort of momentum within the industry that we were seeing even 12 months ago. I hope I’m wrong and that it’s just a matter of time before our properties get smarter, more connected and more efficient, but it seems that big progress may not be happening this year.

John D’Angelo is a managing director with Deloitte Services LP and the real estate solutions leader, designing solutions to address client challenges and push the industry forward. With over 30 years of experience as a management consultant to the global real estate industry, John has helped some of the biggest names in real estate leverage technology and use data to optimize and transform their operations.

Read the February 2025 issue of CPE.