AI Analytics in Commercial Real Estate Is Attracting M&A Opportunities

To sell a product, you must demonstrate its value, and AI analytics tools for commercial real estate are no different. Founders who can point to real-world use cases where their software generated a measurable ROI may be better positioned to raise funding and eventually sell their company.

That said, some applications of AI in commercial real estate have a clearer value proposition than others, and right now, AI analytics that optimize physical building operations may present one of the biggest opportunities for real estate tech founders.

The Value of Analytics in Building Operations

To understand the value of AI analytics in building operations, consider the benefits to the end user: the property owner. As an owner, a property’s value is the present value of its future cash flows (commonly referred to as a property’s NOI). Since cash flow is a function of a property’s revenue minus its expenses, there are two ways to increase it: raise rent or cut operating costs.

However, rents can only be raised so high before the market no longer bears them. This is especially true in today’s high interest rate environment, where revenues are already under pressure by low demand, according to an Ernst & Young article discussing how to navigate the impact of higher interest rates on commercial property. This leaves property owners with one lever to pull: lowering operating expenses, a task that AI analytics is uniquely positioned to perform.

Layering Analytics on Top of Building Automation Systems

Modern commercial buildings collect copious data on their utility usage and other major mechanical systems (electricity, water, HVAC, security, etc.). This is the result of equipping them with sensors over the last decade or so. By connecting these sensors to the internet (aka Internet of Things or IoT), managers can now also communicate with and automate building systems. For example, you can put the thermostat on a fixed schedule or automate when certain lights turn on and off.

AI analytics takes building automation a step further. Instead of serving only as a control board for your building systems, AI analytics actively detects patterns in the data you already collect and recommends ways to optimize building performance, if not automatically implement them. For instance, JLL developed an AI-powered HVAC optimization platform called Hank that makes intelligent micro-adjustments to building systems in real-time based on occupancy patterns, weather forecasts, and any equipment performance anomalies. According to JLL, one client, Nome Capital, reduced its HVAC energy consumption by 45% by using the product.

What’s Driving Growing Valuations for Building Analytics

Though AI analytics for commercial building operations is still in its infancy, companies in this space are already seeing growing valuations from investors. For example, Measurabl, an ESG data platform for commercial real estate, raised a Series D funding round for $93 million in May 2023 and another $6.51 million in June 2025. Meanwhile, the market for building analytics is expected to grow at a CAGR of 14.1% from 2024 to 2030, reaching $22.4 billion by 2030, according to IndustryARC.

The main benefits that investors see in building analytics products include:

• Lower operating costs and total cost of ownership. By far, the biggest advantage of building analytics systems is the ability to cut operating costs by optimizing building performance. This has the most direct impact on a property’s value, driving owner and investor interest. Additionally, building analytic systems can optimize total cost of ownership by bringing forward critical repairs or system replacements that otherwise would create meaningful operating issues if not addressed in a timeline manner.
• Improved tenant experience. The smart building features that come with building analytics platforms also appeal to tenants, further driving demand. Think access control, parking management, room scheduling, etc.
• Compliance with environmental regulations. In markets with strict limits on carbon emissions and monitoring requirements, building analytics platforms can help ensure owners stay compliant, reducing potential legal fines and protecting cash flow.

What Investors Look for In Building Analytics Tech

Of course, to raise capital, you must do more than tout the benefits of your building analytics platform. You must demonstrate its tangible ROI, i.e., share a real-world case study. For example, when implemented at Royal London's 12,500 sqm Birmingham property, JLL’s Hank delivered a 708% ROI, according to the company.

Investors also look for commercial real estate experience. Software built for other industries may not carry over, so you must prove your product works in its intended environment. Furthermore, it must pass a deep third-party due diligence process. If investors can’t assess the integrity of your software, they’ll hire an expert who can.

Gaining a Competitive Edge for M&A Opportunities

On top of demonstrating your company’s value, you must differentiate it from the competition. This is the key not only to attracting investors but selling to building owners in the first place.

To help gain a competitive edge, you can develop algorithms that process data in ways that deliver better results. Unlike CRM software and other established verticals, building analytics hasn’t been commoditized yet. As a result, there’s still plenty of room for innovation.

Alternatively, consider securing a proprietary data source, such as internal data from an HVAC manufacturer. Then, even if you use a generic AI algorithm, the unique data advantage could produce superior building automation outputs, e.g., by knowing what a good HVAC system performance looks like and adjusting building operations accordingly.

Curious about your M&A options and where your software company stands in today’s market? Reach out to one of our bankers for expert advice.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. The material may contain "forward-looking" information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of market returns and proposed or expected portfolio composition. Past performance is no guarantee of future results and there is no assurance this trend will continue.

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