AI Is Optimizing the Back Office, but What About the Physical Office?

Artificial intelligence in the back office automates repetitive cognitive tasks and helps teams quickly find and summarize the information they need.

However, companies are leaving potentially big savings on the table by not using AI to optimize their offices, factories and facilities, according to a report from commercial real estate giant JLL. Real estate costs are typically among the top three highest business expenses.

Companies incur ongoing operating expenses in commercial real estate, which include paying for leases, utilities, maintenance, repairs and the like. This is different from capital expenditures, or the amount of money spent if the company builds its own offices or plants.

By finding inefficiencies in how offices and facilities are run, AI systems can help companies renegotiate leases, consolidate under-used workspaces and optimize energy use, among other tasks, the report said.

Here are areas in commercial real estate that could yield big savings:

1. Optimize space as employees return to the office.

Using AI to predict employee office use can cut costs. By monitoring work schedules, badge swipes, office occupancy through sensors and other metrics, companies can lease the right amount of office or building space they need or downsize, according to the report.

One global financial institution saved more than $120 million a year by analyzing occupancy of its offices to determine actual office use and predict future demand, per the report.

The state of office occupancy is in flux as more companies want workers to return to the office. The PYMNTS Intelligence report “Back-to-Office Mandates Drive Demand for Fast Food, Weekend Shopping and Subscriptions” found that 63% of remote workers are back in the office full time.

About 80% work either in-office or in a hybrid setting, while 17% are fully remote, the report revealed. That’s a decline from the peak of the pandemic when half of employees worked remotely.

2. Predict energy use.

Other savings can be realized by tapping into the mounds of data the buildings themselves generate, such as electricity use, plumbing, air conditioning and ventilation metrics. AI ties this information with weather forecasts to optimize heating, cooling and electricity use in the office, according to the JLL report.

For example, the report said tools like JLL’s Hank use machine learning and real-time data to adjust HVAC systems, reducing energy expenses by as much as 40%.

The operations of buildings account for 30% of global final energy consumption and 26% of global energy-related emissions, according to the latest metrics from the International Energy Agency.

AI systems can also incorporate the use of renewable energy sources, per the JLL report. In one case, a global bank incorporated sustainability into its leasing decisions, enabling it to meet regulatory requirements and internal targets.

By fine-tuning office environments to suit employee needs, companies can also attract employees to the industry, the report said.

3. Make better financial decisions, such as whether to downsize offices.

AI systems can more quickly help companies evaluate whether to stay in the building or leave, plan locations and simplify cash flow models, among other use cases. In one example, a company generated over $250 million in capital from property sales and leasebacks, according to the report.

With 34% of commercial leases set to expire in the next two years, these decisions will become increasingly important, the report said.

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