Editor’s note: It’s a machine’s world

“Location, location, location” is off the map as real estate’s mantra. Enter “data, data, data.” 

The seemingly overnight arrival of AI and hype around a new generation of bots like ChatGPT (which, I swear, did not write any of this editor’s note) may reshape the residential real estate industry. 

Our cover story this month looks at how that might mean radically better real-time valuations for homes, instant marketing materials, more exacting lead generation and even bots replacing brokers in stages of the home-selling process.  

Even Zillow’s notoriously all-over-the-map Zestimates might get better. 

As reporter Patrick Sisson writes, perhaps the biggest question will be whether the tech lives up to the hype — a question even ChatGPT can’t answer. 

The AI revolution also may mean a leaner workforce, which is bad long-term news for office landlords, compounding the more immediate problems they face.

The scion of the dynasty that owns the Empire State Building, Tony Malkin, is now grappling with an existential question: Do offices still matter? 

The world’s most iconic skyscraper opened in the teeth of the Great Depression, lived through 15 recessions and survived a plane crashing into it. But the talent pool’s shift away from the office may be its greatest threat yet, reporter Rich Bockmann writes. 

We examine how Malkin is responding to the changing market (he’s put in a pickleball court) and what it means for other stewards of skyscrapers. 

At least Malkin hasn’t suffered as many recent shellackings as other big-name landlords like Brookfield and Columbia Property Trust, which have defaulted on once-prized properties in prime markets. The head of RXR, Scott Rechler, gives Hiten Samtani a clear-eyed take on how his portfolio is responding to the new realities, with an initiative called “Project Kodak.”  

The Federal Reserve has sounded the alarm about how distress in commercial real estate could rattle the rest of the nation’s financial system. Commercial real estate accounts for 6 percent to 30 percent of a typical bank’s loans, according to the International Monetary Fund. That’s not a small number.  

The distress is not limited to office buildings. We examine how the supertall condo 125 Greenwich (initially developed by a who’s who of real estate including Michael Shvo, Howard Lorber, the late Howard Michaels and Chinese company Cindat) became one of the city’s most prominent stalled sites. Now the project has been resurrected. 

More broadly, we explore how preferred equity is stepping in to save stalled developments, in a story on “rescue capital.” 

If you want to go beyond the issue — and get a little sun and sand — these topics (AI, distressed office space, and rescue capital) will be explored at our three-day Future City retreat in the Bahamas coming up from March 5th to 7th. It’s not too late to buy tickets! 

Elsewhere in these pages, we have our annual ranking of New York’s top residential firms. 

As reporters Harrison Connery and Sheridan Wall write, the year “began on a high carried over from 2021’s record-breaking post-lockdown bonanza, but the spring of hope quickly became a winter of despair as high interest rates froze the market.” Still, the top five firms held steady from the prior year in Manhattan; the fastest riser among the top 10 was Ryan Serhant’s firm, which doubled its sales volume from the year before. 

Don’t miss our profiles from across the country. We have a story on scrappy Los Angeles developer Grant King’s quest to build a hotel empire (he’s behind the Dream, Tommie and Thompson hotels). We also take a look at Andrew Joblon’s Turnbridge Equities, which has built a portfolio of more than $2 billion from New York to Austin. And we have a profile of South Florida’s “lowest-profile” developer, Lewis Swezy, whose portfolio of thousands of apartments and hundreds of acres in a hot South Florida market came together with zero fanfare. 

Enjoy the issue!