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Commercial real estate is shifting from data-led decisions to judgment
The piece argues AI is improving valuation ranges, but deal decisions hinge on factors like ownership structure, financing constraints, and risk appetite.
Commercial Observer, in a July 14 column, said the value of information in business, especially commercial real estate, is declining while judgment is gaining importance as AI makes more data available instantly. The outlet said earlier advantages came from difficult-to-access details such as ownership history, zoning rules, comparable sales, active buyers, and financing options, but AI and automation are accelerating the ability to compile and analyze that information layer. Commercial Observer highlighted commercial investment sales brokerage as an area where AI can replicate parts of the workflow, including analyzing comparable sales, rents, expenses, cap rates, interest rates, zoning, and property taxes to produce valuation ranges. However, the column argued that the more consequential question is often what should be done with that valuation, using the example of an AI-derived answer of $40 million that still requires judgment about the owner’s basis, debt, taxes, partnership structure, family situation, alternative uses for proceeds, risk appetite, and market views.