Streamline sustainable asset enhancement with AI

• JLL research shows that current AI capabilities can potentially optimize 65% of sustainable asset improvement-related tasks through increasing accuracy and speed, streamlining processes and allowing for better data management and retention.
• Leveraging AI-powered technology empowers owners and investors to take a more informed, data-driven approach on their overall asset enhancement and energy retrofit strategy, allowing them to navigate uncertainties in cost-effectiveness and payback periods.
• AI-powered technology could add the most value at four key strategic points in the asset enhancement process: portfolio prioritization, energy audit and modeling, construction management, and stakeholder data sharing. 
• Investors and building owners can take proactive steps for AI integration by defining AI objectives and priorities, assessing organizational readiness, analyzing providers and evaluating the best approach.

How can AI streamline the entire life cycle of sustainable asset improvement projects - from asset selection to audits, delivery and beyond? In our latest research, we set out to provide a holistic view of sustainable enhancements across different areas of commercial real estate operations and outline practical steps for decision-makers to harness this evolving technology and enable decarbonization at scale. In this article, we use the term “retrofit” broadly to encompass sustainable asset improvement projects that extend beyond traditional energy-efficiency upgrades.

Asset enhancements have long helped real estate investors and building owners to increase values, attract quality tenants and comply with regulations. Sustainable asset enhancement, typically delivered through retrofitting, prioritizes enhancing energy efficiency, decarbonization and sustainability performances. It targets three critical real estate objectives: (1) future-proofing existing assets to prevent “brown discount” in value, (2) reducing buildings’ operational costs, and (3) achieving decarbonization.

The successful planning, management and monitoring of asset enhancement projects involves a multitude of tasks. Mapping these tasks against current AI capabilities and product availability reveals clear opportunities for integrating AI for innovative and effective delivery of sustainable asset enhancements at scale.

Recent findings from JLL’s Asset Enhancement Initiatives Survey reveal that understanding the payback period and securing project funding are the largest barriers to undertaking asset enhancement projects. Retrofits, particularly medium to deep retrofits, are so capital-intensive that building owners and investors tend to act with the highest discretion.

However, most owners and investors lack a systematic approach to these projects. Large sums of capital are often committed based on individual building audit reports, without proper portfolio-level oversight. But building audits are not designed to analyze hundreds of properties simultaneously. Companies and experts need effective tools to align priorities - including target tenant preferences, sustainability goals, equipment replacement cycles, upcoming lease expiries, regulatory changes and investment requirements - to help develop a data-driven, costed, time-sequenced and actionable roadmap.

AI and tech solutions offer significant potential to address this strategic planning challenge:

Example AI-powered technology functions available:

The largest costs associated with asset enhancement projects are incurred during execution, encompassing detailed design, procurement of equipment and materials, construction and installation. The quality of work during this phase will determine the extent to which the core objectives – decarbonization and cost reduction in subsequent building operations – are realized.

Common challenges during project execution include limited design options due to time or budget constraints, rising costs of materials and labor, failing to adhere to the construction schedule and maintaining quality control throughout the process. These challenges pose risks of wasted capital and going over budget.

By using AI to optimize schedules and coordinate bulk purchases - especially if multiple buildings within a portfolio can be retrofitted simultaneously - projects can save significantly on materials, equipment and labor. AI can also enhance design, streamline procurement, optimize construction timelines, improve communication with contractors and even identify errors in invoices, ensuring the best results while minimizing costs.

Example AI-powered technology functions available:

Many of these tasks in the execution phase are consistent with other project types that involve design and construction. As a major segment in real estate technology, construction technologies offer the largest number of AI-powered products. There are opportunities to leverage off-the-shelf solutions.

More organized and structured data can yield coherent insights into retrofit processes, allowing owners and investors to continuously track ROI and develop a clearer understanding of payback periods. Enhanced communication between siloed stakeholder groups promotes effective information sharing, which is critical for project delivery and sustained post-completion performance. Most importantly, increased data availability will enhance the effectiveness of all previously discussed AI and technology use cases, bringing long-term cumulative benefits.

To enable retrofits at scale, systematic changes are necessary, such as prioritizing portfolio-level decarbonization planning and tracking long-term financial returns. These changes demand process innovation and advanced tools. As businesses shift from defense to offense in tackling the decarbonization challenge, we believe AI-powered technologies will empower building owners and investors to take a more strategic approach to tackling retrofits.