AI is becoming less of a side issue in commercial real estate and more of a valuation question. In a recent PwC report, the firm argues that the old CRE recovery playbook no longer fits the market, with structural capital rotation, infrastructure convergence and AI-enabled operating models now shaping how investors think about assets and the businesses that run on them.
That shift, according to Tim Bodner, PwC US Real Estate Deals Leader, is moving the focus away from the building alone and toward the operating platform attached to it. "When we say AI-enabled operating platforms, what we're really getting at is a movement away from the asset to the overall operating businesses that sit on top of those assets and are responsible for managing them," Bodner tells GlobeSt.com. "And certainly, when you overlay the benefits of AI inside those operating platforms, that only accelerates the kind of the value creation that we see out in the marketplace."
For CRE investors, the more interesting point may be what this means for underwriting. PwC's view is that markets are operating differently than they did in prior cycles, when the asset and the occupier could be treated as separate and largely independent. Today, Bodner said, that distinction is becoming less practical because speed, data and operating efficiency increasingly influence performance across the hold period.
He pointed to net lease as a useful example. "If you think about the net lease business, that's a pretty simple business, right?" Bodner says. "It's a spread investing business. Basically, what you're trying to do is earn a return on the lease that's above and beyond what your cost of capital is, and the difference is what the value creation is. But if you think about those businesses and how many people they use today to run those businesses, I think the question is, do you really need that? Or is there a way to run the platforms more efficiently through leveraging AI that generates platform value above and beyond the underlying asset value?"
The report also suggests that the old logic of shedding real estate to gain strategic flexibility may be getting reconsidered. Bodner said operating companies that use real estate still end up paying for it through lease costs, plus landlord profit. In an environment where operations matter more, he said, some businesses may decide they are better off bringing real estate in-house, running it themselves and avoiding that added burden. He added that tax and other advantages could also come into play.
That broader operating focus is why AI now matters across the transaction life cycle, according to PwC. Buyers, lenders and institutional investors are increasingly assessing AI readiness in operations, especially where technology-enabled efficiencies affect margins, occupancy optimization, pricing and scalability. The report says some property types, including data centers, senior housing and logistics, are increasingly viewed less as static real estate and more as operational infrastructure.
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