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The AI Hallucination Speed Trap in Commercial Real Estate



What Every CRE Pro Must Know

Artificial Intelligence is transforming how Commercial Real Estate professionals approach everything from prospecting to proposal writing. But with this excitement comes a critical warning: AI hallucinations are real and can lead to serious legal liability.





What Are AI Hallucinations?

In the AI world, “hallucinations” refer to instances where an AI confidently generates false or misleading information even when it appears accurate on the surface.

For example:

•  A financial model might produce incorrect cash-on-cash return or IRR calculations.

•  A lease summary might misrepresent escalation clauses or option periods.

•  A demographic analysis might fabricate income or population growth figures based on general patterns instead of verified datasets, leading to false assumptions about market potential or tenant demand.

Relying on AI to perform detailed financial, lease, or demographic analysis - and using that data to make decisions or handing it off to a client - can set you up for disaster.


The Legal Risk: Don’t Learn the Hard Way


In today’s litigious environment, misrepresenting numbers - especially on investment offerings - can lead to lawsuits, reputational damage, or worse. There is no room for hallucinations in CRE financial analysis. And yet, I see more and more brokers, investors, and underwriters using general-purpose AI tools to generate pro formas, loan analysis and syndication models.




This is why I say, “Don’t expose your liability by taking AI shortcuts.”


A Word of Caution From Experience

As the founder of TheAnalyst PRO, I’ve seen plenty of technology waves sweep through our industry. In fact, we were the first commercial real estate technology company to implement AI over two year ago - long before it was trending on every newsfeed.

Even Sam Altman, CEO of OpenAI (maker of ChatGPT), recently acknowledged the “AI bubble” due to the exaggerated hype flooding the market. And I agree: the buzz is real, but so are the dangers if you don’t use AI responsibly.

“I was recently speaking with a respected investment real estate professional who told me, ‘I started using AI to analyze my properties, and the numbers just didn’t add up. Each time I ran it, the results were different and often wrong.’” - Todd A. Kuhlmann, CCIM, Founder of TheAnalyst PRO


4 Ways AI Is Working in Commercial Real Estate

While AI has its limitations, it can deliver tremendous value when applied appropriately. At TheAnalyst PRO and CRE Tech, Inc., we’ve had notable success using AI for:

1.  Marketing Messaging

    ► Generating compelling summaries for OM materials, emails, and property descriptions.

2.  Image & Brochure Enhancement

    ► Auto-generating visual images and enhancing your presentations.

3.  Data Structuring and Tagging

    ► Using AI to help categorize and organize large volumes of property and location data for easier access, enabling more efficient workflows without replacing human judgment.

4.  Automated Location Risk Summaries (coming soon)

  ► We’re launching a feature that uses AI to summarize extensive location data, including flood, crime, and environmental risk based only on trusted sources that we provide to the model.


Our Commitment to AI Done Right

We have a dedicated development team working full-time to test and safely implement AI into TheAnalyst® PRO. But here’s the key:

“We don’t let AI guess. We provide the AI with the exact data it needs.
That’s the only way to get reliable results.” - Todd A. Kuhlmann, CCIM


In contrast, using open-ended AI tools for financial analysis or lease abstraction without verification is risky business.

At CRE Tech, Inc., we’ve spent over 14 years perfecting our algorithms for cash flow modeling, lease analysis, and investment metrics. These aren’t just theoretical formulas. Our models have been stress-tested across thousands of real-world transactions - deal after deal, year after year - from boutique brokerages to complex syndications and institutional-grade acquisitions.

Unlike black-box AI predictions, we know the logic behind every formula - and we’ve proven it under pressure.

TheAnalyst PRO has been trusted by thousands of CRE professionals across North America and around the world, from CCIM designees and CRE instructors to universities with specialized CRE graduate and master’s programs, brokerage teams, investment syndicators, and asset managers - because accuracy matters. When it comes to financial analysis, location data, or lease modeling, they trust our platform to deliver results that withstand scrutiny.


Final Advice for CRE Professionals

If you’re using AI in your commercial real estate business, here’s what I strongly recommend:

  ✓ Fact check everything, every time you run it.

  ✓ Use AI for tasks like marketing, summaries, or data visualization, not for core financial underwriting.

  ✓ Stick with platforms that control the data inputs and are built for CRE like TheAnalyst® PRO, Argus and Esri.

  ✓ Don’t rely on generic AI tools to write your financials, leases, demographic or location risk reports.