Artificial Intelligence and the Future of Commercial Real Estate

How AI May Reshape Commercial Real Estate, Lending and Property Operations

Artificial intelligence is rapidly becoming an important economic force, affecting banking, commercial real estate, hospitality, construction, healthcare and nearly every major industry.

For commercial real estate owners, operators, investors and lenders, AI may change how businesses operate, how properties are used and ultimately how certain types of commercial real estate are valued.

First National has been involved in commercial real estate lending for more than four decades and has observed the industry through numerous economic and technological changes. AI may be particularly important because it can affect both the physical property and the business occupying or operating from it.

Greater Productivity, and Changing Real Estate Needs

One of AI’s greatest potential benefits is increased business productivity.

Companies devote substantial resources to preparing reports, reviewing documents, analyzing financial information, communicating with customers and performing administrative functions. AI can increasingly assist with these activities.

Commercial real estate companies can use AI to analyze operating information, leases and market data. Hotels can improve revenue management and reservations. Construction companies can use AI for estimating and scheduling. Senior housing operators may improve administrative efficiency.

If businesses can produce more with the same resources, profitability may improve. However, companies that require fewer employees could eventually need less office space.

At the same time, AI is creating demand for an entirely different type of real estate.

Artificial intelligence requires enormous computing capacity, creating increased demand for data centers, electrical infrastructure, cooling systems, telecommunications and power generation. AI is therefore not simply a software phenomenon—it is creating substantial physical infrastructure requirements.

AI and Commercial Real Estate Lending

Commercial real estate lending generates large amounts of information. Lenders review financial statements, tax returns, appraisals, property operating histories, market studies, engineering reports, environmental information, insurance and legal documents.

AI can help organize and analyze this information more efficiently. It may identify inconsistencies, compare historical financial performance and recognize unusual trends.

But greater analytical capability does not eliminate the need for experienced commercial real estate lenders.

AI may identify that a property’s occupancy has declined. An experienced lender must determine why. Is the decline temporary? Has a competitor entered the market? Is management underperforming? Has the local economy weakened?

Technology can improve the information available to a lender. It cannot replace sound credit judgment.

AI and Specialized Commercial Properties

Specialized operating properties may particularly benefit from AI.

Hotels and hospitality properties can use AI to analyze occupancy, average daily rate, RevPAR, booking patterns, competitive pricing and staffing.

Golf courses and private clubs may use AI to evaluate tee-time utilization, memberships, pricing, staffing and food and beverage performance. Combined with modern irrigation systems and weather information, technology could also reduce water and maintenance costs.

Marinas may benefit from improved occupancy management, pricing, customer communications, fuel inventory and maintenance planning.

Senior housing could experience particularly meaningful applications. AI may assist with scheduling, documentation, communications and administrative functions, potentially allowing employees to devote more time to residents. Technology, however, should support rather than replace appropriate human care and professional judgment.

For commercial real estate lenders, understanding how effectively management adapts to technological change may eventually become another consideration in evaluating an operating property.

Construction, Infrastructure and Energy

Artificial intelligence may also change how commercial properties are constructed and renovated.

AI may help developers analyze plans, compare bids, monitor construction budgets and identify potential delays or cost overruns earlier. For construction lenders, better information may improve project monitoring and transparency.

Technology does not, however, eliminate construction risk. Appropriate documentation, independent professional review and lender oversight remain essential.

Energy represents another important consideration.

AI and data centers require significant electricity. Areas capable of providing reliable power, suitable land and infrastructure may attract substantial investment.

This could accelerate development involving power generation, electrical transmission, data centers and related infrastructure, creating new commercial real estate opportunities in markets capable of supporting them.

AI Will Change Employment and Property Demand

Some repetitive and administrative jobs will undoubtedly be affected by AI, while many other occupations will change rather than disappear.

The consequences for commercial real estate will vary.

Businesses requiring fewer employees could reduce their office requirements. Conversely, companies that become more productive and profitable may expand.

Labor-intensive properties such as hotels, golf courses and senior housing could benefit if AI reduces administrative costs and allows employees to concentrate more attention on guests, members and residents.

Property owners, investors and lenders will increasingly need to understand how technological change affects the particular business occupying or operating a property.

AI Cannot Replace Experienced Credit Judgment

Artificial intelligence will become an increasingly valuable analytical tool, but there remains an important distinction between processing information and exercising judgment.

Management quality matters. Borrower experience matters. Property condition matters. Market position matters. Capital requirements matter. The reasons behind changes in financial performance matter.

This is particularly true for specialized operating properties.

A hotel, golf course, marina or senior housing facility cannot be fully understood by analyzing the real estate alone. The quality and performance of the operating business can be equally important.

AI can help experienced lenders identify and analyze information more efficiently. Responsibility for credit decisions should remain with experienced professionals.

Combining Technology With Experience

Artificial intelligence will increasingly influence commercial real estate. Owners, operators, investors and lenders will all use it.

The greatest advantage may belong not simply to those adopting the newest technology first, but to organizations that understand where AI improves efficiency and decision-making—and where experienced human judgment remains essential.

After more than four decades of commercial real estate lending, First National has seen technology repeatedly transform how properties are operated, analyzed and financed.

Artificial intelligence may represent the next major transformation.

The opportunity is to combine AI’s analytical capabilities with the experience, judgment and personal responsibility that remain fundamental to sound commercial real estate lending.