Digital opportunities: CRE trends for 2025 and beyond

What’s new in CRE? A look at how artificial intelligence, third-party cyberattacks and payments innovations are reshaping commercial real estate.

As the global economy continues to balance inflation, an evolving labor market, interest rate volatility and so much more, the commercial real estate (CRE) sector faces another year of uncertainty and opportunity. Even with the Federal Reserve beginning to cut interest rates, the sector continues to face stress from the higher for longer rate cycle and popularity of hybrid work environments as 2025 approaches – especially in core cities and the office subsector. Still, challenges and uncertainty are accompanied by new discoveries and opportunities to build the kind of efficiencies that allow firms to capitalize on the favorable conditions that present themselves in every cycle.

Consensus among participants at the 10^th annual U.S. Bank Commercial Real Estate Treasury Conference was that receding interest rates could open the door for more lending and space to invest capital which has been parked on the sidelines.

Still, CRE leaders are proceeding cautiously. According to our survey of 200 finance leaders in the sector, the percentage that are evaluating M&A, divestiture and partnership opportunities has grown modestly, from 12% in 2023 to 21% in 2024. At the same time, 46% say cutting costs and driving efficiencies within the finance function is a top priority.

Treasury innovations are driving payments evolution

Businesses say receiving money quickly has never been more important and they’re willing to re-negotiate payment terms to better manage cashflow. Industries like CRE can invest in innovations and best practices to help them navigate the now.

Optimizing payables and leveraging digital transformation to simplify processes can better serve suppliers, vendors and tenants while increasing profitability.

Emerging technologies like artificial intelligence are accelerating the evolution in the payments space while raising concerns about cybersecurity and the risk of not implementing technology to protect against relentless threats.

What are CRE leaders watching?

The intersection of banking, technology and market expectations is complex as payments become faster, more embedded and a greater strategic aspect of CRE organizations. Where and when to invest resources is inspiring industry leaders to lean into more innovation and transformation.

What drives innovation as the threat landscape intensifies? What motivates jettisoning paper for electronic payments?

Here are three trends on which industry leaders are focusing:

1. Artificial intelligence can produce true insights

Artificial intelligence (AI) has gone mainstream, creating opportunities to harness its power to improve business operations and customer service, while also opening the door to bad actors exploiting it for nefarious purposes.

AI can produce true insights for developers and property managers to better understand their customers. AI absorbs and leverages more data than we are capable of, with less waste, to deliver what markets want instead of speculating about what they need.

That mixed-use project you want to construct at a certain price on a specific site might prove to be misvalued or misguided. AI can precisely distill information to identify the optimal mix of tenants to build the highest and best use, helping commercial property developers market directly to clients with a refined focus on target customers.

Operationally, AI can gain faster insights by:

• Automating tasks.
• Identifying lease syntax and vetting tenant data.
• Standardizing budget data.
• Resolving customer service tickets.

Because that powerful intel cuts both ways, it is keeping cybersecurity leaders up at night.

2. Outpacing sophisticated AI threats

Sophisticated extortionists are using AI to social engineer phishing emails that alter banking information and seize unauthorized payments from vulnerable servers. They are developing new technologies like deepfake audio to mimic voices and trick employees into believing they are talking to someone in a position of authority.

Some even follow ransomware-as-a-service models in which technology developers create, maintain and update malware for attacks – brashly encouraging victims to contact their “sales department” to prevent disclosure.

On average, third-party attacks interrupt business operations for two to three weeks. Forensic investigations into network exposures and vulnerabilities can take up to two months and prove costly.

Outpacing these threats takes agility and best practices that:

• Consider third parties in addition to your own assets for prevention and reacting to vulnerabilities.
• Inventory data outside of your network when making security decisions.
• Develop a threat and disruption response playbook that includes third parties.
• Patch and update software applications and regularly assess vulnerabilities.
• Use multifactor authentication, including voice recognition on your cellular and internet phone systems.
  

Companies must vigilantly monitor network ports, protocols and services for threats and should only grant administration privileges and access when necessary.

3. Optimize payables, overcome resistance and boost profit

The industry continues to move beyond paper and manual processes. What if you could turn accounts payable (AP) from a cost center into a profit center?

Virtual cards make it easier for companies to ditch paper and reconcile payments with more visibility. Earning rebates and increasing float on those card payments can optimize working capital during an environment of increased cost.

Going paperless also means less time keying in invoices and more time to answer vendor and property manager emails so employees can research their payments needs.

The question for most businesses isn’t whether to innovate, but where to innovate – or how to do it most effectively. As a result, the most popular sessions at the U.S. Bank Commercial Real Estate Treasury Conference involved the various ways CRE firms are approaching their tech stacks, creating efficiencies and leveraging data to grow and protect their businesses:

• Implementing an advanced payables program
• Automating and digitizing security deposit refunds
• Utilizing AI for cash forecasting
• Deciding between in-house and outsourcing resources

CRE treasury leaders are also beginning to embrace payments transformation. According to our survey, 78% plan to implement instant payments via the RTP® network or FedNow® Service by 2026, compared with 41% today. And while just 38% currently use fintech platforms to move money, 78% expect to use them by 2026.   

“Our clients are really digging into their current payment processes as they have had more time during the current economic environment to leverage their team to create efficiencies and build processes to strengthen their company’s payment strategies to weather any storm,” says Chelsey Osborne, U.S. Bank Senior Vice President, CRE DPS Region Manager.

Technology has come a long way to digitize payment processes where the experience is becoming an afterthought, like purchasing a ride share. The future of payments is about pushing the transaction itself into the background and allowing you to focus on your brand experience for both tenants and vendors.

To learn more about how digital payments are transforming treasury management in Commercial Real Estate, contact a U.S. Bank relationship manager.