?? Building Blocks – Week 42

Welcome to this week’s edition. Here’s what you need to know in the world of real estate and emerging trends.

Subscribe to newsletter here:

From the Editor

Welcome to this week’s edition of the blog, where we dive into the crucial intersections of real estate, finance, and sustainability. The stories featured today highlight the rising costs, technological transformations, and innovative strategies that will define the industry's future. From insurance premium hikes to AI advancements, these topics provide a glimpse into the forces driving change.

Since 2018, insurance premiums for CRE have nearly doubled in several U.S. states, according to the Urban Land Institute. These rising costs have put significant pressure on property owners and investors. However, many have been able to cushion the impact thanks to strong rent growth in the sector. The challenge now is balancing higher insurance expenses while maintaining long-term profitability. The industry must reassess its risk management practices to adapt to this new financial reality.

Meanwhile, the Proptech Outlook for 2025 points to the growing influence of technology in real estate. Proptech is driving unprecedented levels of transparency and data access, enabling more accurate property valuations, targeted marketing, and personalized tenant experiences. As these technologies evolve, they will play a pivotal role in enhancing operational efficiency and profitability. The challenge for CRE professionals will be to integrate these tools seamlessly into their business models.

In mortgage lending, AI is helping lenders broaden their market reach, according to ATTOM Data Solutions. By automating complex processes like underwriting and risk assessment, AI is making mortgages more accessible to a wider demographic, especially underserved markets. This transformation is helping both lenders and investors tap into new opportunities, driving more inclusivity in the real estate financing landscape.

Finally, McKinsey highlights the transformative potential of Generative AI (Gen AI) for real estate. With vast amounts of property, market, and tenant data available, Gen AI is set to revolutionize key aspects of CRE. From designing buildings to improving marketing and tenant relations, the possibilities are vast. However, the industry must evolve to fully capitalize on these tools, embracing a tech-driven approach to decision-making.

Together, these articles underscore how the CRE sector is undergoing significant change, driven by external pressures like insurance costs and the internal push toward technological innovation. Understanding and adapting to these shifts will be critical for the industry's success in the years to come.

?

???Key Takeaway: CRE and Insurance Premiums

Insurance Premiums Double in Many U.S. States

Since about 2018, property insurance costs marched steadily upward, almost universally, in commercial real estate, broadly forcing property owners and lenders to strategically confront the reality of soaring premiums and shrinking availability. But much of the industry has also enjoyed significant rent growth, which seemingly has muted the overall impact to bottom-line revenues and property values.

???Key Takeaway: Outlook for 2025

Proptech outlook 2025: Future trends in technology for commercial real estate

The proptech market growth is driven by the need for transparency and data accessibility. Proptech platforms help real estate professionals analyze vast amounts of data. This data-driven approach leads to more accurate valuations, targeted marketing, and personalized tenant experiences, increasing efficiency and profitability.

???Key Takeaway: Mortgage Lending Technology Transformation

Transformations in Mortgage Lending: How AI is Helping Real Estate Lenders Serve a Broader Market

Four Catalysts of Change in Mortgage Lending

Organizations and people often resist change. But eventually, the pressure becomes too great, and adaptations occur.??In recent years, various events have created pressure on the banks and lending institutions and forced change.

???Insights: Gen AI and Real Estate

Generative AI can change real estate, but the industry must change to reap the benefits

Generative AI (gen AI) is maturing at an auspicious moment for the real estate industry. Investors have mountains of both proprietary and third-party data about properties, communities, tenants, and the market itself. This information can be used to customize existing gen AI tools so that they can perform real estate–specific tasks, such as identifying opportunities for investors at lightning speed, revolutionizing building and interior design, creating marketing materials, and facilitating customer journeys while opening up new revenue streams.

??

Follow us?LinkedIn

Feedback: We’d love to hear your thoughts! Reply to this email or join the discussion on social media.

Have a great weekend and a profitable week ahead!