Will AI Drive Property Management Fees to Zero?

Slowly, the real estate industry is buying into the notion that AI can make things easier, faster, and more efficient. This is particularly true in multifamily operations, where AI is gaining traction in everything from leasing to customer service to accounting to maintenance, enabling managers to do more with less.

While executives and asset managers quibble about AI’s capabilities today, few argue that it won’t eventually change the way buildings operate, replacing many human and on-site roles with automated and centralized services. This is already playing out today as owners get comfortable paying third-party managers per-unit fees for centralized services in lieu of on-site salaries, shifting owners’ perception of management fees and value.

Today’s letter will pull on that thread, projecting AI’s long-term impact on property management as a business. As more roles and functions become centralized and automated – and per-unit centralized services fees rise in importance – will management fees see a race to the bottom? And in that world, will the value created by technology platforms accrue primarily to real estate owners or the technology companies themselves?

Let’s dig in.

Big Shifts

This past spring we published a thought experiment: could one build a property management firm with zero full-time employees, offloading everything from leasing to reporting to maintenance dispatch to technology?

While there were some holes in the plan, we got much farther with our automated operator than we did with our automated real estate developer thought experiment from a few months prior. Although some elements of the automated manager were clunky and inelegant, it wasn’t a complete science project; a savvy owner-operator could probably implement 80% of it today without any custom work. And many multifamily operators are pushing in that direction, automating everything from tenant screening to customer service to delinquency management.

It’s hard to imagine an industry going through that kind of technological transformation without some financial upheaval. Setting the context for that upheaval requires grappling with two big, separate-but-related trends: centralization and automation.