Quantum Tech Could Solve Complex CRE Problems In Minutes. Will The Industry Buy In?

On its face, quantum computing sounds like a made-up concept, straight out of a sci-fi flick. 

But far from just a futuristic buzzword, the emerging tech has the potential to upend the way commercial real estate does business.

Complex problems that would be impossible to figure out or take a classical computer years to do, like optimizing portfolios worth billions or accurately predicting future tenant behavior, might be solved in a matter of minutes. 

“You can’t even really comprehend the differences in speed,” said Jake Wright, a vice president at Chicago-based Cresa who is working with groups in the quantum space and visiting labs manufacturing components for quantum computers.

“Classical computing has very limited parameters, whereas quantum algorithms, we can simultaneously use thousands of variables: rent growth, tax incentives, inflation rates, you name it.”

CRE is already salivating over what quantum computing could mean for development at massive hubs in Chicago and elsewhere.

Experts in the field say its revolutionary computing power is what should really be capturing industry attention — though it could be a hard sell in a notoriously slow-moving industry when it comes to tech.

“I just think it’s change resistance,” said Ed Del Beccaro, executive vice president and San Francisco Bay Area manager of TRI Commercial/CORFAC International, one of several people evangelizing the possibilities of quantum in the property industry.

Potential applications for CRE processes are tough to wrap one's head around. But the industry needs to begin trying lest it miss out on a revolution, those studying its applications told Bisnow.

That revolution is coming fast.

Last month, Microsoft announced a technological breakthrough it expects “will realize quantum computers capable of solving meaningful, industrial-scale problems in years, not decades.” 

And big players are entering the ring. Nvidia last week revealed plans to create the Nvidia Accelerated Quantum Research Center in Boston. Meanwhile, in Chicago, PsiQuantum signed last year as the anchor tenant at the 128-acre Illinois Quantum and Microelectronics Park, part of what Illinois Gov. J.B. Pritzker has called a “center of innovation with the power to solve the world's most pressing and complex challenges.”

With companies in the space gearing up to develop the first commercial-scale quantum computer, first movers in CRE could solve problems hard to imagine in the present day, Wright said. 

Owners could use the power of quantum computing to generate extremely accurate property valuations and rental demand assessments by evaluating thousands of different data points in real time, encompassing interest rates, GDP shifts and hyperlocal market behaviors, he said. The industry is currently constrained by historical data and trends, as well as some lagging indicators. 

Another shorter-term application could delve into tenant behavior, allowing landlords to use a quantum-powered AI model to predict corporate expansions and whether a tenant is going to renew a lease or relocate elsewhere, Wright said. That would help landlords optimize their portfolios, buildings, lease terms and pricing strategies. 

“Long term, it could be where you have AI-driven platforms for commercial real estate that are capable of, I mean, truly, fully autonomous investment decision-making, which is kind of crazy to think about,” Wright said. “I don't even think people are really ready to hear that. But if we're really thinking big picture and further down the line, I think that's where it could eventually head.”

CRE should be thinking now about strategic hires as quantum research accelerates.

Writing quantum algorithms or simply using existing ones requires a completely different set of skills than those needed for classical computers, said Abhijeet Ghoshal, an associate professor of business administration at the University of Illinois at Urbana-Champaign.

Companies training workers now to develop that skill set will have a huge advantage. Those that don't have trained staffers will have to work extra hard to find people to fill the gap, he said.

That advantage will be key because going forward, companies could use quantum to effectively “prune” large portfolios, Del Beccaro said. Retailers could more efficiently shutter a portion of stores with more advanced data points than simply sales per square foot.

Artificial intelligence powered by quantum could also help provide zoomed-in demographic profiles of targeted areas, Del Beccaro said. 

“What if the sales per square foot is low, but the market is dynamic and improving?” Del Beccaro said. “That would be a shame to sell that building or lease versus keep one where the demographics over time are going to go away from that kind of a building.

“Where AI helps is, I can ask for a demographic profile. I could ask for where the market is, where the population is going with the household income and get deep analysis in those areas.” 

Finance companies, including big banks like JPMorgan Chase and Goldman Sachs, are already experimenting with using quantumlike computers for their own portfolio optimization problems on a small scale, Ghoshal said.

But the supercomputers they are using today will pale in comparison to quantum’s ability to solve those problems more efficiently — and solve much bigger problems. 

The earliest adopters in commercial real estate will likely be some of its biggest players, larger institutions and REITs with multibillion-dollar portfolios, Wright said. They will be able to stress-test sizable portfolios at scale using thousands of different models and indicators at 100 times the speed of what is possible today. 

Still, some of the most impressive use cases of quantum computing aren’t something CRE will see in the next year or two. 

The nascent field is still a long way from its optimum level of power. That is down to how quantum computing works.

At a basic level, quantum computers process information in a fundamentally different way than classical computers. Traditional computers think in binary, using bits — the most basic units of information — which work like tiny switches that can be either 0 or 1. Quantum computers use qubits, which can be 0, 1 or both at the same time. 

This property, called superposition, lets quantum computers explore many possible outcomes at once instead of testing one by one. Some systems also use “entanglement,” in which qubits become linked and work together. Technicalities aside, the key takeaway is this: Quantum computing unlocks speed and scale far beyond what classical machines can handle.

The major hang-up is no one has quite figured out how to do it on a commercial scale yet. Different companies are racing to create the first quantum computer that does just that. For now, the processing power of quantum computers remains small, and while they are fit for companies to experiment with, they aren’t powerful enough for commercial use, Ghoshal said.

Each company in the race is tackling the details of how to develop a commercial-scale quantum computer in a different way, but regardless of what technology they use to develop the systems, the end target is a functional, wide-scale quantum computer, Ghoshal said.

“In theory, all these technologies should yield the same results,” he said. “Different parts to reach the same goal, essentially.” 

So many investment dollars being poured into quantum computers’ research and development could go to waste, but it is unlikely, Ghoshal said. Although the field still isn’t certain that quantum computers can solve problems faster than a classical computer, a computational theory called quantum supremacy, early tests are promising. 

“More likely than not, it will turn out to be a very important tool,” Ghoshal said. “All countries who have resources are investing in it.

“So many countries should not be such fools that they're putting hundreds of millions of dollars on this thing, right? There has to be something. Everyone is seeing something. That's why they're investing in it. So it's just a matter of time.”