New Kid on the Block: 5 Emerging Trends in Commercial Real Estate
The commercial real estate market has been in constant turmoil over the last five years, with shifting interest rates, increased vacancy rates (reaching a near historic level of 19.2% in Q3 of 2023), and technological advances playing a significant role in the turbulence. For attorneys and knowledge managers involved in complex deal-making, staying ahead of these trends is not only critical for success but also necessary to remain competitive in a rapidly changing environment. This article will explore five commercial real estate trends, and the revolutionary impact Generative AI (GenAI) will have on the industry as a whole.
- Building Data Infrastructure for Better Decision-Making: Having access to the right data at the right time is indispensable for legal professionals tied up in commercial real estate transactions. The ability to process and analyze large data sets helps lawyers uncover market trends, assess property values, and perform due diligence with greater accuracy. Organizing these datasets is incredibly important, but it requires extensive resources to search through and manage this information. Having access to a deal point database, especially one that makes use of emerging technology like GenAI (more on that later!), allows law firms to extract and analyze critical deal precedents from a firm’s own experience, allowing them to draw competitive insights and make data-driven decisions that align with client interests.
- Increased Due Diligence on Environmental, Social, and Governance (ESG) Factors: From a legal perspective, there is a heightened emphasis on ESG considerations in commercial real estate transactions. Law firms are now conducting more comprehensive due diligence to evaluate the sustainability practices and social impact of properties. This includes assessing potential environmental liabilities, the carbon footprint of buildings, and the governance practices of the entities involved in the transaction. Compliance with ESG standards is becoming a critical factor in the valuation and marketability of commercial properties.
- Rise of Cross-Border Investments: Globalization has led to an increase in cross-border real estate transactions, which come with their own set of legal challenges. Law firms are now required to have expertise in international law, familiarity with the legal systems of different countries, and an understanding of foreign investment regulations. This trend necessitates a multidisciplinary approach to navigate the legal complexities of cross-border deals successfully.
- Technology Adoption in Transaction Processes: The adoption of technology in legal practices, particularly in real estate transactions, is a growing trend. Law firms are utilizing digital platforms for virtual closings, blockchain for more secure and transparent transactions, and smart contracts to automate aspects of the deal process. These technological advancements are streamlining workflows, reducing paperwork, and increasing efficiency in large commercial real estate deals.
- GenAI: At the forefront of technological innovation in legal real estate transactions is GenAI. This cutting-edge technology is transforming the way legal professionals analyze and execute deals. Litera's Foundation Dragon is the first GenAI deal point database that is specifically designed to comprehend vast volumes of legal text and extract pertinent information, enabling lawyers to quickly identify critical deal elements and patterns. By leveraging GenAI, legal teams can predict outcomes, draft documents, and provide strategic advice with unprecedented efficiency, ensuring they stay one step ahead in the negotiation process.
How Litera's Foundation Dragon Empowers Legal Teams
Litera's Foundation Dragon product has been adapted to address the complexities of real estate transactions, making it an invaluable asset for legal professionals. Foundation Dragon can be your firm’s competitive advantage in commercial real estate negotiations. By harnessing the power of GenAI, Foundation Dragon can rapidly extract and organize critical deal data from contracts, property records, and due diligence documents. This enables legal teams to:
- Identify key terms and clauses across multiple documents instantly
- Gain insights into competitor deal structures and market trends
- Reduce the time and resources spent on manual data extraction and analysis
The integration of Dragon into the transaction process empowers lawyers to deliver superior service to their clients, offering a competitive edge in an industry where speed, accuracy, and strategic insight are paramount.
In conclusion, the commercial real estate transaction landscape is being reshaped by technology and new industry practices. Staying abreast of these trends is essential for lawyers committed to excellence in their field. By incorporating innovative tools like Dragon, legal professionals can not only adapt to these changes but also lead the charge in delivering cutting-edge, client-focused solutions.
