AI is Smarter than Us – And it’s Power Hungry Too

AI is quietly outsmarting us all. It’s predicting when that HVAC will break, adjusting thermostats before we know we are cold, and answering resident questions before we know they have them. 

But while AI is making our properties smarter, faster, and more efficient, it’s also putting unexpected pressure on our energy grids. Suddenly, the energy demands of running AI systems, data centers, and smart buildings are causing some real-world headaches. In other words, AI is making life easier… and possibly a little more expensive. Here’s the latest on how it’s affecting the multifamily industry—both the good and the not-so-great.

First, The Good News

AI is revolutionizing the multifamily industry, and the benefits are hard to ignore. According to the U.S. Artificial Intelligence Institute (USAII®), AI is making its presence felt across various areas in the real estate sector. Here’s a breakdown of how it’s transforming the way multifamily properties are managed:

• Smarter Operations: AI can automate property management tasks like rent collection, maintenance scheduling, lease renewals, and more. It can also increase safety and security with advanced technologies such as facial recognition.
• Enhanced Resident Experience: Chatbots driven by AI offer 24/7 support to residents, offering your residents immediate answers while freeing up your site team. Smart home technology also ensures your residents are comfortable while cutting their utility usage automatically.
• Strategic Decision-Making: AI-based analytics are used to optimize rent pricing, forecast occupancy rates, and inform better investment strategies. AI tools can also use this data to market your properties to the most qualified prospects and streamline the leasing process. 

The Not-So-Great News: AI’s Unexpected Energy Demand

If AI sounds perfect, it certainly isn’t. As AI systems become more sophisticated and embedded in our daily lives, they require an increasing amount of energy to operate. For the past two decades, the utility industry has become accustomed to low or falling load growth. However, the utility industry is currently seeing an unexpected surge in demand and AI cannot keep up. 

The Financial Times recently ran a headline warning that “Booming AI Demand Threatens Global Electricity Supply.” According to reports, global data center electricity consumption is expected to nearly triple from 15 terawatt-hours (TWh) to 46 TWh by the end of the year. In the U.S., McKinsey predicts that data center power demand will grow by 240% by 2030. This increased energy demand is raising concerns about grid reliability, especially in regions with limited infrastructure.

As noted in a report by Grid Strategies, “The End of Flat Power Demand Is Over,” the imbalance between load growth and power generation capabilities could cause significant reliability issues, particularly in areas like the Southeast, California, and much of the central U.S. from the Upper Midwest to Texas.

And there’s more. The increasing use of data centers also means that more water is needed for cooling systems. A single Google data center, for instance, consumes about 450,000 gallons of water per day. When AI and data storage needs ramp up, it’s not just the electricity grid that’s at risk—it’s water resources too.

What This Trend May Mean for the Multifamily Industry

For the multifamily industry, these utility strains could have significant implications:

1. Lower Economic Growth in Some Regions: As some areas experience energy grid bottlenecks, they may miss out on economic development opportunities, including investments in new multifamily properties.
2. Higher Electric Rates: To keep up with the growing demand for power, utilities may have to invest in new power generation and transmission infrastructure, which could lead to higher electricity rates.
3. Water Use Restrictions: As data centers gobble up more water for cooling, regions may face increased water usage restrictions or higher water rates, impacting multifamily properties.
4. Grid Reliability Concerns: During high-demand summer months, power outages or disruptions could become more common, especially in areas already struggling with grid capacity.

Multifamily property owners and managers will need to keep a close eye on these trends as AI and data-driven demand continue to grow.

So, Now What? Managing the Trade-Offs

As we harness the power of AI to improve just about everything, we need to also recognize its unintended consequences—particularly when it comes to energy and water demand. Utility management will become more critical than ever before, and a proactive approach to energy and water conservation will help mitigate the rising costs associated with AI’s growing demands.

That’s where we come in. By providing smart utility management solutions and analyzing utility data, Conservice ensures that multifamily properties can take full advantage of AI’s capabilities while minimizing the impact on costs and reliability. With the right tools, we can navigate this brave new world of AI in multifamily real estate while keeping the lights on—and the water running.