While owners, developers, and builders overall continue to adopt more environmentally sustainable practices, they still need to be proactive and vigilant about ever-increasing scrutiny from both investors and regulatory bodies. Sustainable and responsible practices are worthwhile in themselves, of course, but especially in an era of increased ESG mandates they are crucial for ensuring profitable and successful projects.

From conception, owners and developers can evaluate design, engineering, and construction options from a range of angles, such as building costs, scheduling projections, and difficulty of execution. This involves hard questions, including some fundamental ones.

It’s often said that the most sustainable building is the one you don’t build. However, is it better to build a new Net-Zero building and tear down a poorly performing building, considering its embodied carbon? Or is adaptive-reuse the answer? Or is it better simply to bring specific aspects of a building within local codes? Where a project lives will also impact priorities from cost and sustainability perspectives—which is to say nothing of individual organizational goals.

Ultimately, owners need to make decisions based on increasingly complex sets of data—and often need to navigate mandates that may appear at first to cross purposes, such as cost and sustainability. In other words, what is built and how it is built are one thing. How much it costs and how it can be done most efficiently are usually quite another. Long after owners, architects, and engineers determine the environmental impacts of a project, there continues to be project risks and pricing concerns that are tied to decisions related to sustainability. A transparent, cost-effective, long-term project and cost management approach is crucial.

Each project presents a distinct set of environmental challenges, and while sustainability considerations are undeniably important, the financial feasibility of a project or property also remains of paramount importance. If a ground-up or renovation project doesn’t pencil out, its sustainability goals become moot because the project won’t move forward. At the very least, a building won’t maximize its utility across its lifecycle, which benefits neither the people who use it nor the owners and investors. Similarly, owners need to be intentional about upgrades to older buildings to meet increasingly stringent and punitive codes, as well as to ensure they’re future-proofed to the degree that’s possible.

Challenges include the financial burden on property owners, the need for innovative retrofitting solutions, and the pressure to maintain property value while complying with regulations. After the design and construction considerations are planned, there is still a significant effort needed to ensure that all sustainability goals are met, the project team is built to address them, and the schedule and budget can accommodate them.

A project needs to have clear benchmarks in mind and ensure that materials, building practices, and the finished product are aligned to hit compliance goals or incentive targets. From a carbon perspective, one approach is to interrogate carbon quantities to look for potential changes at the design stage to reduce the impact. For example: How many times will an owner or occupier need to replace the material? What is the anticipated maintenance schedule and costs?

The focus isn’t just on minimizing costs; it’s about more involved cost-benefit analyses that assess the long-term financial implications of sustainable features. The approach should ensure sustainable options fit within the budget. This could involve evaluating construction methods that balance environmental benefits with cost-effectiveness, as well as lifecycle costing, which considers maintenance, repairs, and energy consumption.

Overall, resource and cost management are particularly important facets of managing projects compliantly and responsibly. This efficiency is crucial for property owners seeking to adopt sustainable practices without compromising the business side of a project. Ultimately, sustainability and project profitability are intertwined. By overseeing the alignment of the project’s environmental goals and diligently managing compliance, owners and developers can mitigate risks and enhance the outcome of a project.

Oliver Fox, is a Senior Director based in MGAC’s Washington, DC office and has more than 20 years of experience providing pre-construction and construction project control services for a variety of project types and sectors including vertical and horizontal construction.

Lone Star PACE helped arrange $40 million in C-PACE financing for the revitalization of ViVa Center, a 2.3-million-square-foot technology hub in Houston, supporting the development of data centers aimed at driving the growth of AI.

The 774,000-square-foot facility at 11445 Compaq Center West Drive is part of the recently rebranded ViVa Center, which was originally the headquarters for Compaq Computer and later acquired by Hewlett-Packard Enterprise. This turnkey data center will cater to hyperscale users in the cloud computing and artificial intelligence sectors.

Financing proceeds will be used to install sustainable building components to Phase 1 of the data center development. Improvements include energy-efficient windows, LED lighting, advanced HVAC systems, and high-efficiency plumbing upgrades.

C-PACE allows property owners to access low-cost, long-term financing for energy and water conservation systems at commercial buildings. Property owners can use C-PACE to finance new construction, building retrofits or recapitalizations.

Nuveen Green Capital served as the capital provider for the project, which involves retrofitting an existing building. Phase 1 is scheduled for completion this fall.

At full build-out, the ViVa Center development will offer 250 megawatts of power, a dedicated chilled water plant and a natural gas pipeline for energy generation.

Are investors returning to the commercial real estate market? A new report from Colliers suggests that they are. And that’s good news for those looking for a turnaround in today’s challenging commercial real estate market.

A good example? Investment activity in the multifamily sector has increased.

According to Colliers’ most recent U.S. capital markets report, $38.8 billion of multifamily assets traded in the second quarter of 2024. That is broadly on pace with this asset class’s pre-pandemic averages from 2016 through 2019.

Colliers also pointed to the industrial sector as one that is again attracting investors. In its report, Colliers said that the industrial sector remains the most attractive for investors seeking to sink their dollars in commercial real estate.

Colliers said that $20 billion of industrial assets traded in the second quarter of this year. At the same time, the average price of these assets increased by 8% on a year-over-year basis.

Investors aren’t flocking to all asset classes, though. Retail investment sales fell to $9.9 billion in the second quarter, according to Colliers. The second quarter, in fact, saw a new cyclical low for volume and the number of properties traded.

However, Colliers also reported that the fundamentals of the retail sector remain solid. This includes solid asking rents and low vacancy levels. Because of these strong fundamentals, Colliers is predicting that investors will gradually return to this sector.

And office? This sector, not surprisingly, isn’t attracting as many investment dollars as it once did. Colliers reported that the office sector generated only $11 billion in investment sales volume during the second quarter.

Colliers said that lenders and special servicers are becoming more active regarding short sales, deeds in lieu of foreclosure and foreclosures in the office sector.

Matthews Real Estate Investment Services™ closed the sale of Main Marketplace, a shopping center located at 1690 FM 423 in Frisco, Texas.

Matthews™ Associate Baylor Worman and AVP and Associate Director Grayson Duyck represented the buyer in the transaction.

Located in the West Frisco submarket, the retail center is positioned on 14.65 acres and boasts 115,736 square feet across nine buildings. Main Marketplace is 97% occupied with its current tenant mix consisting of entertainment venues, restaurants, and fitness, including Capriotti’s Sandwich Shop, Flix Brewhouse, Texas Family Fitness, and more.

CBRE’s Michael Austry and Jared Aubrey represented the seller in the transaction.

Main Marketplace was purchased by an all-cash private investor based out of Texas.

Generative AI has outgrown its “buzzword” status—it’s already a boon for various financial, operational, and administrative tasks. Some estimates suggest it can boost individual productivity by at least 40%, and 91% of business leaders recently surveyed believe it can benefit the entire organization.

This is a phenomenal feat at the basic human level, considering it’s still a nascent technology with few initial “generations.” We’re still in the early innings.

Across real estate—and more specifically, property management—it’s supercharging UX and customer service: improving how users interact and converse with their technology (and yielding incredible time savings—around 12.5 hours per week, according to AppFolio data). With this AI, users are no longer limited to navigating a tricky interface to get work done. Instead, it can learn key workflows, generate correspondence (emails and text messages), and leverage machine learning and wider business data to automate rote tasks. Recent qualitative research from AppFolio also shows that AI users in this space rely heavily on technology to communicate with their residents, including as a translation tool to help break language barriers.

AI emboldens real estate teams to do more—turning users into builders who can fine-tune inputs and gather insights instantly. Ultimately, it acts as a unifier in a way that other technologies simply cannot replicate.

Here, I’ll explore what other vertical markets can learn from the innovation and adoption of embedded GenAI in real estate.

Improving customer service, compliance

Since embedded GenAI platforms rely on natural language inputs, they’re incredibly user-friendly out of the gate. Tech-savvy users and those who are less tech-savvy can all navigate these platforms to reap unique benefits.

Unlike conventional software platform interfaces, GenAI’s conversational features foster engagement and comprehension. With interactions that rival human dialogue, users can quickly prompt their embedded AI to analyze troves of data that might take human teams days, even weeks. While estimates suggest that around 40% of working hours could be augmented or automated by GenAI, I believe that’s a fairly conservative number. Ultimately, for property management teams—or any teams for that matter—these savings unlock more time for strategic thinking or to more directly address customer satisfaction.

For instance, this AI—especially when embedded into industry-specific software like a property management system—can analyze large volumes of text to ensure compliance with local regulations. It can also automate the creation of (and ensure pinpoint accuracy of) legal documents and verify that all communications and operations adhere to relevant laws.

It can even drastically uplevel customer service: providing personalized and instant responses to resident inquiries, automating tasks like maintenance requests, and even absorbing portions of after-hours support (say, for scheduling purposes).

Across other verticals, outputs from embedded GenAI will directly drive innovation in fields such as robotics, while the capital increase spent on everything from research to new chips will have a halo effect for almost every sector in our economy.

Workflow automation: A closer look

While I’ve mentioned that embedded GenAI can uplevel customer service, it’s worth noting how helpful it can be, particularly with incredibly time-consuming, often tedious, tasks. So, let’s explore a communications use case: In property management, it’s up to operators to keep their residents informed about planned maintenance, payment preferences, or upcoming renewal dates.

That means it falls to staff to cue up messages to reach residents individually about, say, utility work happening on the grounds. Teams can prompt their embedded GenAI tool, which taps into business data/functions, to handle the drafting, identify the proper recipients, and automate the notifications moving forward.

Outside of housing, I foresee a space like healthcare experiencing similar benefits. In fact, providers—along with insurers—can use GenAI to synthesize and recommend tailored risk considerations for patients based on their medical history and existing medical literature. The AI provides an opportunity to cut administrative burdens and costs and becomes an incredibly strong resource that teams can use for tailored, impactful data.

No matter its use case, AI’s dynamic nature changes the way teams interact with their software, compared to more walled-off solutions, all without straining staff.

Turning users into builders

Business decisionmakers have increasingly just added to existing technology stacks for quick (but potentially complex or buggy) access to new features. They’ve also relied on existing staff to do more or keep pace. But, neither scenario addresses longer-term needs. This AI innovation, however, has proven that greater efficiency may not be out of reach.

Still, simply layering GenAI atop a fragmented data foundation will also lead to inaccuracies and complexity. To benefit from its efficiencies, teams should consolidate workflows using an integrated platform, which will equip an AI tool with the data access it needs to operate.

AI’s minimal learning curve means that it no longer takes years of IT training to interact with technology, nor do users need to wrangle data across an enormous tech infrastructure to do something as simple as acquiring a vendor quote for a sink repair. Instead, AI users are “builders” with a sturdy data “foundation” and customizable features at their fingertips—all of which help slash burdensome tasks.

Undeniable advantages

The upside here is undeniable: Embedded GenAI portends a future where users can ease and improve their workloads and productivity. In housing, its benefits trickle down to residents and can yield greater satisfaction and potentially more renewals or referrals. GenAI’s impact will be felt across many other industries for similar reasons.

Again, this is just the beginning. We’ll witness ongoing product refinement and improvement, with more deep learning and natural language processing breakthroughs. The immense potential here excites me for the future, though I am equally impressed by what AI has already accomplished. With it, SaaS tools have more agency to assist business users, who can expect unprecedented efficiency, customization, and insight.

Matthew Baird is Senior Vice President, Engineering, at AppFolio, responsible for empowering the company’s engineering team to execute product commitments with exceedingly high-quality, agility, and speed. Prior to his time at AppFolio, Baird was the Founder, Chief Technology Officer, and Vice President of Engineering for AtScale, Inc. He’s an accomplished thought leader who is a regular speaker at major big data events.

CBRE negotiated four new office leases totaling over 23,000 square feet at 20 Greenway Plaza in Houston, Texas, bringing the property to over 82% occupancy.

Marilyn Guion and Steve Rocher with CBRE represented Stockdale Capital Partners in lease negotiations.

The new leases include:

1. TP ICAP Americas Holdings, Inc. – 11,567 rentable sq. ft represented by Anya Marmuscak (JLL)
2. Affiliated Engineers Inc.  – 6,945 rentable sq. ft represented by Ray Lopez (Colliers International)
3. Investar Bank – 2,525 rentable sq. ft. represented by Mike Pipes (Partners)
4. TriplePoint MEP Holding Inc. –  2,066 rentable sq. ft. represented by Marilyn Guion (CBRE) 

20 Greenway Plaza is a 10-story Class-A WiredScore Platinum certified office building totaling 433,132 sq. ft. The property offers tenants an array of amenities including a new state-of-the-art fitness facility, coffee lounge/deli, conference facilities, outdoor collaboration area, yoga classes, mother’s room, electric vehicle charging stations, back-up generator capacity and abundant parking availability for tenants.

Located on the northwest corner of Norfolk and Cummins Streets, it provides nearby access to Highway 59 and Loop 610, Westpark Toll Road, as well as Lifetime Fitness and LA Fitness and many retail food options within walking distance of the building.