Excel and AI Usher in New Era of Commercial Real Estate Business Intelligence

Originally published by iOi

There are two types of people in almost every office: the Excel genius and everybody else. Real estate professionals are not immune to the benefits of a great Excel spreadsheet, but let’s be honest, Excel can be complicated with all those useful formulas. 

The good news is that if fate has not given you access to an Excel genius, technology can now make you into one. Lately, artificial intelligence (AI) is transforming Excel, making it more powerful and efficient and simpler to use. Yes, you could even become that Excel Genius.

Adding the Power of AI to Excel 

Adding AI has quickly taken Excel from a tool for crunching numbers and creating charts to an invaluable data analysis and business insights tool for organizing data and better understanding it. The integration of AI and Excel means beginners can use it without the challenge of sorting data and knowing complex formulas. Experts can use it to organize data sets, identify and analyze data patterns and create predictive models. 

AI-powered Excel features automate repetitive tasks such as data entry and analysis. It can find errors and recommend formulas based on the data being used. It can easily process vast amounts of data and identify data anomalies, risks and opportunities. It produces spreadsheets with more reliable insights and allows users to focus on what to do with those insights rather than how to interpret and process the data.

What’s more, AI-enhanced Excel does all of this by using add-ins—software programs designed to expand the functionality and capabilities of Excel. 

Empowering CRE With AI-Enhanced Excel 

These Excel add-ins can be especially useful in commercial real estate (CRE), where they can be used to streamline financial modeling and data analysis and make it easier to manage complex real estate transactions. AI-enhanced Excel algorithms available in tools like Excel 4 CRE—to name just one—offer predictive analytics capabilities based on historical data, which is a game-changer for CRE in terms of anticipating market trends and gaining competitive advantages. Keep in mind, when using third-party plugins make sure you understand the terms and conditions. Sometimes more than just the data you provide will be used by these third parties. 

AI-enhanced Excel can uncover complex patterns in the data to identify hidden insights. Natural language processing functions allow users to interact with data using basic queries, which makes data analysis more accessible to all CRE users and equips business decision-makers with more detailed and valuable information than they may have had access to before.

Use Cases in CRE

AI-powered Excel can transform the complexities of CRE business functions, making Excel easier to understand and complex business functions easier to execute. CRE is embracing this tool in a variety of ways, from expanded keyboard shortcuts for financial modeling and writing assistance that checks worksheets for errors to custom functions such as residual land valuation and geocoding. 

Evaluating the cost-effectiveness and profitability of multiple lease options requires expertise and time. AI-enabled Excel can automate the complex calculations used for comparative lease analysis. For example:

• Net present value calculation: AI can easily calculate the NVP of lease payments by seamlessly factoring in escalations in rent and discounted rent rates.
• Effective rent calculation: AI can provide efficient comparisons of lease costs and streamline the process of using NPV data to determine effective rent rates.

Profitability is the goal of every CRE investment and return on investment (ROI) analysis is a critical function. AI and Excel can be used for essential calculations such as:

• Internal rate of return: Tracking investment profitability over time is simple to automate using AI. 
• Equity multiples: AI-enabled Excel simplifies the process of calculating and comparing cash received to cash invested.

Planning for the maintenance and improvement of CRE properties is another process that benefits from AI-enhanced Excel tools. These tools can be used for critical capital expenditure planning (CapEx) functions such as:

• Budgeting and forecasting: Detailed CapEx budgets and forecasts can be developed with considerations such as asset lifespan and maintenance schedules.
• Prioritization: AI provides valuable business intelligence to inform the prioritization of capital projects based on their financial impact and operational efficiency.

AI-powered Excel tools make business better both at the task and process levels. Beyond improved workflows, these AI tools can generate formulas, explain how a formula works, and provide guidance if you don’t know what formula to use. It can also streamline your ability to audit, analyze and manage complex formulas and spot formula errors across worksheets while you work. In addition, it can identify nested IF functions, external references and overly long formulas that can lead to inaccurate financial models; and illustrate the dataflows in models while identifying potential issues.

If you’re intrigued by what AI can do for spreadsheets, do a little investigating to learn about and understand other AI-enabled tools built for the CRE space. There are AI tools for asset/portfolio management specializing in CRE lease abstraction— like Prophia—rent roll pricing and data roll up, digitizing data needed for real estate underwriting, property management, custom generative pre-trained transformers (GPTs) for numerous tasks, and much more—all built to transform the way CRE development, management, advisory, acquisitions, marketing and office teams work.

Smart Yet Simpler CRE Applications

Right now, AI-powered Excel is making it easier to take advantage of advanced analytics tools in real estate. These tools are already transforming the way CRE does business.

And in the real estate market, the competitive advantage will go to the CRE professionals who are watching, learning, and implementing tools like AI-enhanced Excel for next-level business intelligence.