AI adoption in commercial real estate still in early stages, expert says

Frustrated by the sluggish performance of the accounting software being used to manage its residential portfolio, QuadReal Property Group was on the hunt for a more modern alternative.

After a trial run in 2023, the Vancouver-based real estate firm selected Funnel Leasing, an artificial-intelligence-powered platform, to centralize and automate leasing across its more than 10,000 Canadian rental suites.

QuadReal says Funnel’s virtual leasing agent slashed the lag time between a potential renter’s apartment tour request and the firm’s response to minutes from days. That helped increase tour-to-lease conversion rates by 33 per cent, shortened vacancy periods and boosted rental income.

According to Statistics Canada, 18.6 per cent of real estate rental and leasing companies planned to deploy AI software in the second quarter of 2025, compared to just under 11 per cent in the 2024 period.

While uptake has been gradual, the number of Canadian property technology (proptech) startups has grown exponentially, reaching more than 590 in 2025 ⁠– from about 530 the year before. The vast majority offer AI software and machine learning products, with many focused on updating real estate management procedures, according to a recent report from Proptech Collective, a national industry association.

Saving time and improving efficiency

For QuadReal, the largest savings that have come from implementing Funnel Leasing have been with respect to employees’ time, Christine Williams, QuadReal’s vice-president of national operations and administration, says in a testimonial on Funnel’s website.

In addition to using an AI agent, the customer management software handles lead-to-tour bookings and lease pre-qualification, freeing up workers to focus on serving prospective and current residents, Funnel says.

Along with assuring prompt responses, Tyler Christiansen, chief executive of Tampa-based Funnel Leasing, says the platform aggregates QuadReal’s properties so staff manage a portfolio of rentals rather than a single unit. This allows prospective tenants touring apartments to have a single point of contact as opposed to communicating with a number of different human agents.

Mr. Christiansen says aggregation promotes efficiency, which means fewer agents are needed to handle portfolio irrespective of size. He says one customer, Texas-based Camden Property Trust, is posting annualized savings of US$4-million to US$5-million due to administrative staffing reductions and improved occupancy rates.

Funnel’s renter-management platform is among a swath of established and emerging AI software applications that interpret data across real estate processes to make commercial and residential firms more efficient.

These types of platforms have the ability to manage leasing and rent collection, automate repetitive tasks such as data entry, analyze market data to forecast property demand and calibrate building systems so they auto-adjust to internal and exterior temperature conditions.

Using AI to support energy efficiency, cost-savings

While Santa Barbara-based Yardi Systems’ comprehensive property management suite is still the dominant real estate platform in Canada, competing products offer specialized capabilities, says Tony Cocuzzo, Deloitte’s Canadian leader of investment management and real estate sectors.

Meanwhile, some of Canada’s largest commercial property owners and operators have also turned to AI to lower their greenhouse-gas emissions, boost business efficiency and improve occupant experiences and security across all asset classes ⁠– starting with office and retail but expanding to residential and industrial.

For example, in 2023, Cadillac Fairview Corp. began deploying proprietary, off-the-shelf software algorithms that interpret data from thousands of smart sensors in its office towers across North American urban centres.

The buildings’ software auto-adjusts utility settings and predicts maintenance and cleaning requirements.

Arv Gupta, Cadillac Fairview’s senior vice-president of operations services, says AI software that alerts security personnel of potential threats stemming from crowd formations and weapons, which are detected through the software’s video feed analyses, rolls out at CF malls next year.

Due to automation, he says Cadillac Fairview, which owns and operates a 30-million-square-foot portfolio, is capturing annual savings of 4 to 6 per cent on an annual energy budget of more than $110-million. There were savings on energy and maintenance within 30 months.

Maintenance request work orders have also been reduced by 10 to 15 per cent. On the other hand, costs are mostly attributed to AI software licensing fees that are typically paid annually at two cents a square foot.

“Once you get past project set-up costs, savings are going to override the cost of the software,” which is typically billed based on square footage,” Mr. Gupta says. While there are labour savings, he acknowledges that “you don’t necessarily reduce, you just deploy differently so people can do more important things.”

Still in nascent stages

Still, Mr. Cocuzzo notes that AI adoption in Canadian commercial real estate is at an early stage partly due to the computing power, training and governance that it demands.

“There are a lot of tools on the market, but they‘re not cheap,” he says, adding that firms need to consider what best suits their needs when it comes to more sophisticated AI offerings.

According to a recent report, Canada’s proptech companies raised $450-million in 2025, down from $800-million in 2024, though this number was skewed by one large deal.

The capital decline comes amid a global pullback in venture funding in the property sector.

Stephanie Wood, vice-president at venture capital fund Alate Partners and the report’s lead author, says today’s tighter capital market means companies are selective when it comes to AI investments.

“People are trying to figure out areas of the business where AI can have the most impact rather than trying to boil the whole ocean,” she says.

“While fundraising has been tougher, it’s also been a forcing function that’s made the ecosystem stronger. You have to be prepared for things to not work, but you won’t learn if you don’t try.”