How are commercial real estate finance leaders approaching today’s challenges?

High interest rates and rising costs have hammered commercial real estate (CRE) over the past two years. And low occupancy rates caused by the rise in remote working have added to the sector’s challenges.

How are finance teams in the sector coping? Have their plans and perception of risk changed? How do they feel about today’s economic and geopolitical climate, as well as digital and payments transformation? And are they doing anything differently from finance teams in other sectors? We surveyed 200 commercial real estate financing leaders to find out.

Here’s what we learned.

1. There’s a renewed focus on growth.

Cutting costs is still a top priority, but a more positive business environment is encouraging CRE finance leaders to pursue growth initiatives:

2. The pace of change concerns many leaders.

More than a third of CRE finance leaders (36%) say that the pace of technology change and digital disruption is a top-three risk for their business.

The current priorities of finance leaders reflect this short-term wariness. Just 24% say their priority is driving revenue growth, compared with 37% who are focused on cutting costs across the business. Of those, 47% plan to cut costs by deploying technology, while a third (33%) expect to restructure their workforces. However, only 21% expect to make job cuts, slightly more than a year ago (19%).
 

3. Data analytics has come to the fore.

Cautious leaders in the world of financing for commercial real estate are more likely to pursue digital transformation by investing in their data capabilities, rather than by experimenting with new technology such as AI: 55% plan to invest in data analytics, compared with 52% of finance leaders in other sectors.
 

4. High aspirations but slow progress on payments transformation.

More than three-quarters of commercial property financing leaders (78%) expect to implement instant payments (RTP® network/FedNow® Service) by 2026, compared with 41% who are using it today. Just 38% currently use fintech platforms to move money, but 78% expect to use them by 2026.