What the Monterey Peninsula Can Teach Us About Commercial Real Estate

As I shared last week, I celebrated the 68th year of my birth recently. My wife treated me to a weekend at Pebble Beach. I know. But someone had to do it.
 
We stayed in a spot overlooking the iconic Pebble Beach golf links—home of the annual AT&T Pro-Am and countless major championships over the years. The golf course has witnessed so many unforgettable moments, from Jack Nicklaus’ famous one-iron shot to a foot at the 17th hole in the 1972 U.S. Open to Tiger Woods’ runaway U.S. Open victory in 2000. Orange County is well represented, too, with Mark O’Meara hoisting the AT&T trophy a record five times and Jordan Nasser claiming the title of California amateur champion there in 2006. As a lifelong golfer, I was in awe.
 
The weather can be a bit tricky in January, but we rolled lucky snake eyes—clear skies and cool temps. Perfection!
 
So what do my ramblings about the former home of the Crosby Clambake have to do with commercial real estate?
When you think about Pebble Beach, it’s easy to picture the world’s greatest golfers competing on a pristine course, overlooking the rugged coastline. But beneath the beauty and the legends, Pebble Beach is a masterclass in careful planning, adaptability, and excellence—the same principles that apply to success in commercial real estate. 
 
Let me share a few lessons I learned during my visit.
 
It’s the journey, not the destination, that matters.
Each hole at Pebble Beach presents a unique challenge, much like every deal in real estate. Some days, the weather’s perfect, and every shot falls into place. Other days, you’re fighting wind, sand traps, and frustration. But just like in golf, the process of getting there—the strategy, the effort, the adjustments—is where the real value lies. The destination—a trophy, a closing—is just the cherry on top.
 
Professional golfers and real estate agents eat what they catch.
Golfers and real estate professionals share a bond: there’s no safety net. A missed putt or a deal that falls through means starting over. But that pressure drives us to be resourceful, resilient, and relentless. It’s not for everyone, but for those who thrive under the challenge, the rewards are sweeter because we’ve earned every bit of them.
 
Don’t overlook the trees for the forest.
Golfers know that every hole, every shot, every decision matters. It’s tempting to focus on the big picture—your scorecard, the finish line—but the real work happens one stroke at a time. In real estate, the same holds true. It’s the small details that often make or break a deal—a clause in the contract, the way you handle a client, or even the vibe of a property. Don’t lose sight of the trees.
 
Focus on the freedom.
Standing on the 18th fairway at Pebble Beach, gazing out at the Pacific, I couldn’t help but feel an incredible sense of freedom. Golf, like real estate, offers that in spades. You’re not tied to a desk or a clock. Sure, there are deadlines, but the autonomy to chart your own course is priceless.
 
There are many ways to score.
The beauty of golf—and real estate—is that there’s no single path to success. Some win by overpowering the course with booming drives, others by finesse around the greens. In real estate, success can mean building relationships, mastering negotiations, or finding creative ways to add value. The key is to play to your strengths and embrace the diversity of opportunities.
 
As I soaked in the beauty of the Monterey Peninsula, I realized how much the game of golf and the art of real estate have in common. Both demand patience, creativity, and a deep appreciation for the journey. And both, when done well, offer rewards far beyond the scorecard.
 
So, the next time you’re out on the course—or walking through a property—remember this: it’s not just about where you’re going. It’s about how you get there. And sometimes, the view along the way is the greatest reward of all.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

Crazy Things

2025 marks some milestones in my commercial real estate career as well as my stint as an Orange County Register contributing columnist. I’ve now been plying my brokerage trade for 40 years! Wow. Some reading this column aren’t even forty years old, and here I am, doing the same thing for over four decades. February 2025 will also be my 10th anniversary as your faithful commercial real estate voice through these pages. It’s been my honor to share weekly thoughts, market insights, and best practices with you. By the time you read this, I will have completed another orbit around the sun—my 68th. So, there’s that.

Today, I thought it would be fun to share some of the craziest things I’ve witnessed during my forty-year commercial real estate career. Here goes:

There’s a Hole in the Bucket, Dear Liza
This was maybe the most monumental issue I’ve ever overcome. Late one day, I got a call from the buyer of a business park telling me there was a hole in the parking lot. I thought he was joking since we were scheduled to close escrow in a week. He assured me he wasn’t and added that the hole was growing larger by the moment. I quickly got in my car, drove to the site, and was horrified by what I saw. There was a hole the size of a VW Beetle—and it was growing. At this rate, it seemed destined to swallow the entire parking lot and maybe the buildings, too.
Fortunately, we discovered the City of Brea was responsible. A leaking waterline, left unchecked for decades, had caused the collapse. The city fixed the problem just in time for escrow to close, but it’s a moment I’ll never forget.

Bridge to Nowhere
This one is a classic “new agent” story and one of my favorites. We were touring office space on the fifth floor of a newly constructed building. Little did we know that when the door closed behind us, there was no exit. We found ourselves trapped on a fourth-story balcony overlooking a major thoroughfare. This was before the days of cell phones, so we had very few options. Fortunately, a vagrant passed by, and after a bit of bribery, he helped free us. Lesson learned: always check for an exit before the door closes behind you!

Freeze, Gopher!
The scariest tour I ever conducted happened in a vacant building in Anaheim. My partner and I arrived early to preview the premises and turn on the lights for our client. As we fumbled in the dark for the power panel, we suddenly heard, “Freeze!”
Two Anaheim PD officers, guns drawn, confronted us. It turns out we had tripped a silent alarm in our search for the lights. Thankfully, they realized we weren’t burglars, and we were able to laugh about it later… much later.

Rain, Rain, Go Away
We once sold a site in Anaheim that had formerly been a fiberglass manufacturing company. Years of fiberglass residue had permeated the floors and soil around the building. I was certain the site would fail its environmental test, killing our escrow. But, as luck would have it, torrential rains hit the night before the inspection. The rain washed away all visible traces of the residue, and the site received environmental clearance. Sometimes, Mother Nature lends a hand.

Houston, We Have a Problem
Never in my career was I as scared as during the financial meltdown of 2008 and 2009. It felt like the end of our industry. I had already survived the savings-and-loan implosion and the dot-com bubble burst, but this was different. I had the largest deal of my career under contract, and it blew up during this time. After mourning the loss, I put my head down and got to work. It was tough, but the market eventually rebounded, as it always does.

Microscopic Foe
Exactly five years ago, I attended an economic presentation by Northwestern Mutual. The forecast predicted a strong economy through 2020, with only a slight chance of softening. There was a brief mention of a virus causing supply chain issues in China, but the presenter didn’t seem concerned about its impact on the U.S. economy.
Two months later, we were quarantined in our home offices. I was convinced this was the black swan event that would crater our commercial real estate market. For six weeks, it looked like I was right. But then something unexpected happened. Industrial real estate values skyrocketed. Between June 2020 and June 2022, rents and per-square-foot values tripled in some cases. It turns out all that online shopping required a lot of warehouse space.

Conclusion
Forty years in commercial real estate has given me a front-row seat to some of the wildest, scariest, and most surprising moments. From sinkholes to silent alarms to global pandemics, this industry is anything but predictable. Yet, through it all, I’ve learned to adapt, stay resilient, and find humor even in the craziest situations.
As I celebrate these milestones, I’m reminded of what a privilege it is to do what I love and share my experiences with you. Here’s to the next adventure—and maybe even crazier stories—in the years to come!

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

2025 Predictions

Happy new year dear readers and welcome to 2025! Yes.  It’s that time of year when I get to prognosticate on what this year might bring in the world of commercial real estate. I have a high bar to reach since my 2024 crystal ball was in fact, crystal. 
 
So what might 2025 bring? Let’s get our Nostradamus on, shall we?
 
The State of the Market
As we step into 2025, it’s clear that the ripples of 2024’s market conditions are still making waves. The industrial sector remains a mixed bag—demand for large logistics spaces has softened compared to its pandemic-era peak, but there’s still steady activity in the smaller spaces under 200,000 square feet. Many owners entered this year holding their breath as vacancy rates ticked up in certain submarkets.
 
Interest rates, the ever-present elephant in the room, continue to dampen transaction activity. The cost of financing has sidelined some buyers and made leasing a more attractive option for others. Meanwhile, sellers are navigating the gap between the prices they want and the reality of what the market will bear.
 
Prediction #1: The Return of Creativity
Necessity is the mother of invention, and in 2025, we’ll see more creativity in deal structures. Sale-leasebacks, options to buy, seller financing, and joint ventures will gain prominence as market participants find ways to make deals pencil. Sellers who resist adjusting to the current pricing environment will need to meet buyers halfway through innovative terms.
 
For tenants, expect landlords to sweeten the pot. More free rent, tenant improvement allowances, and flexible lease terms will be offered as owners vie for occupancy in a more tenant-favorable environment.
 
Prediction #2: Resilient Submarkets
While some industrial hubs will see softer demand, others will shine. In 2025, we’ll see heightened activity in submarkets that offer strategic advantages—whether it’s proximity to major ports, affordable labor, or access to large consumer bases. The Inland Empire in California and areas in the Midwest and Southeast will likely see continued attention from both owners and occupants. 
 
What’s interesting is the “flight to quality” within these markets. Class A properties with modern amenities, ample parking, and high clear heights will see increased demand because the price gap has narrowed between older, less functional spaces. 
 
Prediction #3: The Rise of Reshoring
Last year, we started to see the effects of reshoring—companies bringing manufacturing and distribution closer to home. In 2025, this trend will accelerate as the new administration takes office - especially in the industrial sector. Proximity to end users, reduced reliance on overseas suppliers, and geopolitical stability are driving this shift.
 
What does this mean for commercial real estate? 
Secondary and tertiary markets will shine as companies seek affordable land and labor. Don’t be surprised if you hear about booming activity in places you’ve never associated with industrial growth before.
 
Prediction #4: AI Steps Into the Spotlight
Artificial intelligence will play a bigger role in commercial real estate in 2025. From automating lease management and analyzing market trends to predicting tenant behavior, AI tools are becoming indispensable. Brokers, landlords, and investors who embrace AI will gain an edge in efficiency and decision-making.
 
One area poised for disruption is site selection. AI-driven platforms will help occupants analyze logistics networks, labor availability, and even local energy costs to identify the best locations. On the transactional side, expect faster due diligence as AI speeds up property evaluations, financial modeling, and risk assessments. Those who adapt quickly will find themselves ahead of the curve.
 
Prediction #5: Caution, Not Panic
If 2024 taught us anything, it’s that this market rewards patience. In 2025, investors will remain cautious but opportunistic. Those with cash will find opportunities to acquire properties at more reasonable valuations. Expect a slow-but-steady transactional pace as everyone waits for interest rates to stabilize and inflation to ease.
 
Occupants, meanwhile, will be strategic, leveraging market conditions to secure favorable terms while keeping a close eye on operating costs. Gone are the days of hasty decisions; this year, it’s all about deliberate, informed choices.
 
Looking Ahead
If I’ve learned anything from years in this business, it’s that predicting the future is equal parts art and science. The trends we see now—creativity in deals, resilient submarkets, reshoring, the rise of AI, and cautious optimism—are the best indicators of what’s to come.
 
So, dear readers, here’s to a year filled with resilience, adaptability, and maybe even a few surprises. Let’s revisit these predictions in 12 months to see just how clear my crystal ball was this time.
 
Cheers to a prosperous 2025!
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

A Review of My 2024 Predictions

Seasons greetings dear readers as we eye Christmas in the rear view mirror, and Kwanzaa and Hanukkah as they’re  proceeding! It’s truly the season of giving and from all of ours to all of yours - best wishes!
 
Two of my favorite columns to write each year occur during this time - my previous year scorecard and my predictions for the year to come. Last year, I wrote my 2024 prognostications on the heels of an Alabama football defeat - which as a native Arkansan - warmed my heart. We’ll have to wait much longer this year as the NCAA football champ will be crowned in a few weeks. But I digress. On to how I did in 2024. 
 
In 2024, I wrote: Industrial lease rates will soften. This time last year, a client of ours was facing an expiring lease. We tried to find a suitable alternative to move his operation. Nothing was ideal. We advised him to stay put, negotiate a short term fix - 6-12 months and continue our search. His owner would only agree to six months so we had a new deadline - June of 2023. We nearly struck pay dirt in March but jettisoned the opportunity due to its size - just not quite big enough. Once again, we approached his owner asking for some more time. He agreed to extend through December. Our gamble paid off as we secured a suitable building at a 15% discount! Why, you may wonder? Simple economics. We tracked new avails and ones leaving the market and noticed an imbalance. Yep. More was coming than going. We knew someone would drop their rate to secure a great tenant. Expect more of the same this year - especially with Class-A buildings above 100,000 square feet. At last count in the OC - eleven were open for business and seeking a resident. Two left the market last year. Hmmm. Someone will get motivated and make a deal, comps will reset to the new level and the frenzy will begin.  BOOM! Nostradamus take note. In the IE where big boxes prevail, a precipitous increase in concessions has occurred - free rent, tenant improvements, beneficial occupancy, etc. Rates have dropped another 15%. Expect more of this as we absorb the remaining spaces. 
 
In 2024, I wrote: Expect sales volume to increase. The forces outlined in the paragraph above will trickle into the sales world. By that, I mean  an owner awaiting a tenant may choose to sell. A further catalyst could be the underlying debt on the asset. Imagine you’ve originated a short term construction loan to build a class A structure. You considered construction costs, time to build and lease. Your calculus was based upon conditions in early 2022. You’ve delivered a new building into an entirely different market - longer vacancy and lower rates. Your lender might be getting a bit nervous. When will the maturing debt be repaid?Thus pressure to dispose of the new build. YES! Selling in the beginning of 2024 was a pipe dream - no one was a seller. Now, sales are happening at a higher clip. 
 
In 2024, I wrote: Recession or no? I say no. Last year I took a contrarian approach and predicted we would avoid a recession in 2023. Recall, recession is a decline in gross national product for at least two quarters. I believed in the resiliency of the United States economy, especially the consumer, and we skated by a recession in 2023. As I write these predictions today, the only storm clouds I see on our horizon, are global uncertainty in the Middle East. Specifically, will the Red Sea shipping lane disruption cause inflationary pressures on goods delivered? If this proves to be the case, the federal reserve may be persuaded to delay cuts in interest rates, which are predicted for this year. However, I’m reminded of our status in January 2020. We were rocking along when a microscopic foe sent us to our spare bedrooms. Therefore, beware of the Black Swan event. WOW! Three for three. In fairness, I did walk this back a bit in my mid year adjustments, but alas, we avoided a recession and stuck the landing. J Powell in da house. But will he be there next year?
 
In 2024, I wrote: Interest rates. Last year, for the first time in a couple of decades, you could actually make money on idle cash. We saw a peak in Treasuries occur last year when the 10 year T-note eclipsed 5%. The rate this morning is slightly above 3.8%. This is good news for borrowers, bad news for savers and could cause an uptick in institutional buying activity. These behemoth money managers are constantly seeking return and might view commercial real estate as a safe haven to earn some additional juice. I believe the 10 year notes will level at around 4 to 4.25% percent this year. MIC DROP! OK. We’re a bit above the 4.25% level but significantly below the 5% we eclipsed this time last year. Plus the yield curve has flattened so that short term rates are below long term rates - a good thing for lenders. 
 
So? I’ll give myself a 3.5 out of 4. Not bad for a rookie. Stay tuned for next week when I’ll see what’s in store for 2025. 
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.

Common Lease Terms

We are embroiled in a lease negotiation currently. Discussions can vary depending upon the size of the building being leased, the complexity of the terms, and the sophistication of the parties.
 
Sometimes known as the “second negotiation,” the process can be mind-numbing. What is the first negotiation, you may be wondering? Typically, it’s the agreement upon business points such as the amount of rent that the tenant will pay, how the rent will escalate throughout the lease, abated rent, the length of commitment, and the condition in which the premises will be when the lease commences and expires. As brokers, we do this first negotiation work.
 
These business points are generally debated, and an agreement is forged. From there, a non-binding letter of intent forms the basis from which a binding lease document is crafted. And let the games—or in this case, the second negotiation—begin!
 
You’ll witness both sides lawyer up and “turns” will be swapped. Normally, the landlord will submit a draft document to the tenant and tenant’s counsel. The first turn occurs when the lawyer representing the tenant presents her proposed edits, changes, and language insertions to the draft. The turns continue until one side says uncle or until the parties agree upon a satisfactory compromise. 
 
As commercial real estate professionals, we sit by idly as the fate of our carefully authored business deal gets scrutinized.
 
So what are some of the most common sticking points for counsel to volley?
 
1. Operating Expenses (CAM Charges)
One of the most contentious areas of negotiation is who pays for what when it comes to common area maintenance (CAM). Tenants want predictability and often request a cap on controllable expenses or exclusions for certain costs, like capital improvements or management fees. Landlords, however, prefer flexibility, leaving expenses broadly defined to ensure full cost recovery.
 
2. Repairs and Maintenance
The question of who repairs the roof, maintains the HVAC system, or resurfaces the parking lot can lead to significant back-and-forth. Tenants naturally prefer landlords to shoulder the burden of major repairs, while landlords aim to push as much responsibility as possible onto the tenant. In multi-tenant buildings, this can be especially complex.
 
3. Tenant Improvements (TIs)
When tenant improvements come into play, the scope of work, completion deadlines, and cost overruns are often debated. Additionally, tenants and landlords may spar over whether improvements become the landlord’s property upon lease expiration or if the tenant has the right to remove them.
 
4. Assignment and Subletting
Businesses evolve, and tenants often seek the ability to assign their lease or sublet the space if needed. Landlords, however, want assurance that the financial strength and operational nature of any new occupant won’t negatively impact the property. Negotiations can revolve around the conditions under which these transfers are permitted.
 
5. Default Remedies
Default clauses are where things can get tense. Landlords seek broad definitions of tenant default and swift remedies, while tenants want narrowly defined defaults with ample notice and grace periods before penalties kick in. Finding the middle ground here can take time—and creativity.
 
6. Casualty and Insurance
Recent natural disasters have made casualty clauses a critical focus. Who pays for repairs after a fire, flood, or earthquake? How much insurance is required? Landlords may push for expansive tenant obligations, while tenants demand clarity to avoid unexpected liabilities.
 
7. Option Terms
Options to renew, purchase, or expand are like mini-negotiations within the lease. While tenants value flexibility, landlords worry about limiting their future rental or sale opportunities. Every word in these clauses matters, which is why lawyers scrutinize them so heavily.
 
A Broker’s Perspective
As brokers, our role during the second negotiation is both limited and crucial. While we’re not in the room debating legalese, we can act as interpreters—helping our clients understand the practical implications of proposed changes. Often, our experience allows us to suggest creative compromises that bring both sides back to the table when they’re at an impasse.
I’ve seen deals stall for weeks over seemingly minor details. One tenant once insisted on two reserved parking spaces, a request that cost the landlord almost nothing but became a symbolic sticking point. It took some gentle nudging to remind both sides of the bigger picture.
 
Tips for Navigating the Second Negotiation
If you’re heading into lease negotiations, here are a few tips to keep in mind:
1.       Hire experienced counsel. A seasoned real estate attorney understands the nuances and can save you time and money.
2.       Pick your battles. Focus on clauses that directly impact your business operations and bottom line.
3.       Stay flexible. Compromise is the name of the game. A deal where both sides win a little often lasts longer than one where one side feels steamrolled.
4.        
In the end, a well-negotiated lease sets the foundation for a successful landlord-tenant relationship. And for brokers, there’s no better feeling than seeing a deal come together—twice.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.
 
 

AI Tools To Assist Commercial Real Estate Professionals

Last week we celebrated ChatGPT’s second year birthday with a review of how Chat can be used in commercial real estate. Today, I’d like to zero in on some specific tools that we as commercial real estate professionals are using to make the day to day easier and more efficient. 
 
For industrial real estate, AI tools and technology solutions are tailored to address the unique challenges and opportunities in logistics, warehousing, manufacturing, and distribution. Here’s a breakdown of recommended tools specifically for the industrial real estate sector:
 
1.       Market Analysis and Site Selection
·        CoStar/LoopNet: Industry-standard platforms offering market analytics, property listings, and comparable data for industrial real estate.
·        Reonomy: Uses AI to analyze industrial property data, including ownership records, zoning, and historical trends, helping identify off-market opportunities.
·        Crexi PRO: Provides industrial market insights, listing exposure, and data analytics to identify emerging opportunities.
1.       Predictive Analytics for Industrial Trends
·        Placer.ai: Analyzes foot traffic, demographic patterns, and market shifts, helping assess industrial site viability based on logistics trends.
·        Orbital Insight: Uses satellite imagery and AI to track industrial activity such as construction progress, inventory levels, or logistics hub demand.
 
1.       Workflow Automation and Property Management
·        Yardi Breeze: Tailored for industrial property management, offering lease tracking, expense monitoring, and automated workflows.
·        Building Engines: Provides tools to streamline maintenance requests, tenant communications, and operational efficiency for industrial portfolios.
·        Prologis Essentials Marketplace: Offers asset management solutions specific to industrial spaces, such as energy monitoring and warehouse optimization.
 
1.       Supply Chain and Logistics Optimization
·        JDA Software (Blue Yonder): Uses AI for supply chain management, optimizing warehouse operations and logistics hubs.
·        Flexe: Facilitates on-demand warehouse solutions, using AI to match available industrial space with logistics needs.
·        FourKites: Real-time AI-powered tracking and visibility for freight and supply chain logistics, crucial for industrial occupiers.
 
1.       Lease Management and Financial Analysis
·        VTS Rise: Integrates industrial property leasing workflows with AI-driven insights, including tenant demand and market trends.
·        Argus Enterprise: Advanced modeling and valuation for industrial real estate portfolios, including lease comparisons and pro forma analyses.
 
1.       Tenant/Occupant Management
·        EliseAI: Automates tenant communications, lease renewals, and occupancy tracking, enhancing tenant relationships in industrial spaces.
·        Basking.io: Monitors warehouse occupancy and operational patterns, helping optimize space usage and reduce costs.
 
1.       Marketing and Outreach
·        Matterport for Industrial: Creates immersive 3D virtual tours of warehouses and manufacturing facilities, enhancing marketing efforts and reducing time spent on physical site visits.
·        Brokermint: Provides industrial property marketing tools, including proposal generation and automated deal tracking.
 
1.       Drone Technology and Inspection
·        DroneDeploy: Integrates drones with AI to inspect industrial properties, track construction progress, and map large industrial sites.
·        Skycatch: Provides high-resolution site imaging and 3D modeling for industrial property evaluation and planning.
 
Each of these tools addresses specific aspects of industrial real estate, from acquisition and management to logistics and sustainability. By incorporating these technologies, you can streamline operations, improve decision-making, and enhance client service in this specialized sector. 
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.

AI’s Impact Upon Commercial Real Estate

Chat GPT, Open Source’s artificial intelligence model, broke onto the mass market approximately two years ago. When Microsoft invested billions of dollars into an unproven technology, you knew this was a big deal.  
 
You can’t talk about the future of commercial real estate without recognizing the massive impact artificial intelligence is already having. ChatGPT, OpenAI’s groundbreaking model, burst onto the scene just two years ago, and the ripples have been impossible to ignore. When Microsoft poured billions into OpenAI, it became clear this wasn’t just another passing tech trend.
 
I wrote one of the preceding paragraphs. Can you guess which one? Exactly! 
 
So. There is one example. Using AI to draft long form narratives - blogs, stories, property descriptions, case studies and the like. 
 
But to only highlight this function would be to dramatically understate its capabilities. 
 
Recently, our office of Lee & Associates selected a new President. A committee was formed of which I was a member. We used AI to craft a job description for the position. We asked each candidate to prepare a business plan. These plans were poured into the engine and asked to compare and contrast each candidate based upon their plans vs the job description. Created from Chat were ten interview questions and a scoring system based upon each response. Chat even chose the most likely to win the ratifying vote. How’d it do, you may ask? Well, the candidate it chose wasn’t the candidate selected by the vote. Suffice it to say - we humans still reign. 
 
To explore how AI will impact the eight key steps of brokerage, let’s break it down step by step. AI isn’t just a buzzword—it’s a tool that can enhance every phase of the process, making agents more efficient and effective while providing deeper insights. Here’s how:
 
1. Sourcing. AI excels at combing through massive datasets, from public records to online listings, to identify properties or clients that align with specific criteria. Machine learning models can analyze market trends, demographic shifts, and historical data to pinpoint opportunities agents might otherwise overlook. Tools like predictive analytics can even forecast areas primed for development or investment.
 
2. Finding. AI-powered platforms streamline the property search process by matching client needs with available options. Imagine entering a set of requirements—location, size, zoning, budget—and having an AI return a tailored list of properties in seconds. Virtual tours enhanced by AI can also give clients a more immersive understanding of spaces without setting foot on-site.
 
3. Qualifying. AI can automate the process of qualifying leads, saving agents time and energy. Chatbots and CRM integrations can engage with prospects, ask key qualifying questions, and prioritize leads based on their likelihood to close. AI tools also analyze creditworthiness, tenant histories, or business viability to ensure prospects meet necessary criteria.
 
4. Controlling. Managing the flow of information and timelines is critical. AI tools like project management software can keep deals organized, automate follow-ups, and provide reminders for critical deadlines. Natural language processing can even analyze communication patterns to detect when a deal might be at risk, giving agents the chance to course-correct.
 
5. Execution. During the negotiation and documentation phase, AI can analyze lease terms, purchase agreements, and market comps to provide insights or identify red flags. Smart contracts, driven by AI and blockchain, can automate parts of the execution process, ensuring compliance and accuracy while reducing the time spent on back-and-forth negotiations.
 
6. Closing. AI can improve the closing process by streamlining workflows, automating document generation, and ensuring all compliance requirements are met. It can also track progress on escrow, title searches, and financing approvals, reducing the likelihood of delays. Digital signature platforms with AI integration further simplify the closing process.
 
7. Compensation. AI can help ensure compensation agreements are tracked accurately and fairly. Systems integrated with AI can calculate commissions, track payments, and generate transparent reports for all parties involved. Additionally, predictive analytics might help agents model future compensation scenarios based on their deal pipelines.
 
8. Continuation. The work doesn’t stop after the deal closes, and AI ensures agents stay top-of-mind with their clients. Automated follow-up systems powered by AI can check in periodically with past clients, send personalized updates, or even flag when a client might be ready for another deal based on activity patterns.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.