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ommercial real estate now faces fresh uncertainties—whether the AI boom will endure, how resilient U.S. consumer spending remains, and the long‑term sustainability of debt. To stay competitive, firms are overhauling operations, tapping diverse data, securing new capital, and forging partnerships.
At a recent conference panel, experts compared today’s lending climate to past downturns. Greg Wolkom of Wells Fargo noted that banks are better capitalized than during the 2008 crisis, with less portfolio sales and more private‑credit funds offering 10‑15% returns. This shift forces equity investors to reassess risk premiums.
Infrastructure funds are increasingly entering real‑estate markets, especially data‑center projects, blending lower‑return, long‑term cash flows with high‑tech demand. Meanwhile, urban cores remain in flux; mixed‑use neighborhoods see some foot traffic, but office occupancy lags. Converting office towers to residential use is a partial fix, yet not a cure-all. Data centers, often outside city centers, attract both capital and government interest, prompting cross‑sector collaboration to integrate AI into local economies.
Housing affordability has surged to the political forefront, compelling economic‑development agencies to step in. Municipalities are experimenting with regulatory reforms, financial incentives, and fast‑tracked approvals, though progress varies widely—from Calgary’s ambitious plans to Chicago’s limited action.
Underwriting is quietly transforming. Ryan Luby of Wells Fargo highlighted the gap between traditional metrics (rents, occupancy) and nontraditional data (foot traffic, local activation). Integrating these sources can boost explanatory power by 50‑60%. However, challenges remain: data access, quality, integration, and advanced analytics. Generative AI alone cannot solve these; foundational data issues must be addressed first. A nationwide “qualified parcel scoring” system could streamline site selection, reduce risk, and identify viable office‑to‑residential conversions or new housing projects.
Alex Wolkomir of McKinsey cautions that AI’s value hinges on measurable outcomes, not just dashboards. The industry’s “use‑case” mindset leads to fragmented implementations; instead, firms should rethink entire domains—underwriting, approvals, asset management—to unlock true AI-driven efficiencies.
