Trends & Insights: The Future of Commercial Real Estate
Just how good is AI at predicting the future?
Jul 24, 2024
In this enlightening discussion, Ryan Severino, Chief Economist at BGO, David Rea, Chief Economist at JLL, and Alberto Lopez, Global Forecasting Director at JLL, delve into the state of AI in commercial real estate forecasting. They explore how AI enhances predictive models but emphasize the critical need for human insight in interpreting data. The trio tackles the challenges of data quality and outlines the future of AI-driven analytics. Real-world examples illustrate the significance of sound methodologies and the evolution of market trend forecasting.
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Quick takeaways
- AI significantly enhances rent forecasting by utilizing vast datasets to improve predictive accuracy, surpassing traditional econometric methods.
- Despite technological advancements, human expertise remains vital for interpreting data and refining models to ensure reliable forecasting outcomes.
Deep dives
Traditional Rent Forecasting Methods
Traditionally, rent forecasting involved using econometric models to identify key variables that influence rental prices. Economists would gather market knowledge and input various factors into models to approximate and predict economic trends. This approach relied heavily on the expertise of individuals familiar with the local economy and market dynamics. However, these methods often lacked flexibility and were susceptible to inaccuracies due to the limited scope of data considered.
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