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Industry Landscape
The Commercial Real Estate (CRE) due diligence industry is undergoing significant modernization, driven by technology and the need for efficiency. Cloud-based platforms are streamlining traditional processes, offering faster, more accurate risk assessments. Regulatory compliance, particularly for SBA lenders, remains a critical driver. The industry is responding to demands for comprehensive, integrated solutions to reduce loan fallout and accelerate transactions, positioning itself as vital for informed decision-making.
Total Assets Under Management (AUM)
Commercial Real Estate Transaction Volume in United States
~$540.3 billion (Q1-Q3 2023, annualized)
(-52% CAGR)
Commercial real estate transaction volume has seen a significant decline due to:
- Rising interest rates
- Economic uncertainties
- Tightening lending standards
Total Addressable Market
100 Billion USD
Market Growth Stage
Pace of Market Growth
Emerging Technologies
Artificial Intelligence (AI) & Machine Learning (ML)
AI and ML can automate data analysis from various due diligence reports, identify patterns, and predict potential risks (e.g., environmental liabilities, property degradation) with greater accuracy and speed.
Blockchain for Property Records
Blockchain can create immutable and transparent records of property ownership, transaction histories, and due diligence reports, significantly reducing fraud and streamlining verification processes.
IoT Sensors & Predictive Analytics
IoT sensors deployed in commercial properties can provide real-time data on building condition, energy usage, and environmental factors, enabling proactive maintenance and more accurate condition assessments.
Impactful Policy Frameworks
Infrastructure Investment and Jobs Act (IIJA) 2021 (Bipartisan Infrastructure Law)
The IIJA allocates significant funding towards infrastructure projects, including brownfield remediation and environmental justice initiatives, impacting environmental assessment requirements and liability in certain CRE transactions.
This policy could increase demand for environmental due diligence services, particularly for properties near or impacted by infrastructure development and brownfield sites, potentially introducing new compliance considerations for CRE transactions.
SBA Environmental Policy and Procedures (SOP 50 10 7A)
Effective August 1, 2023, the SBA updated its loan program requirements, including environmental policies, emphasizing compliance with ASTM E1527-21 for Phase I ESAs and specific environmental risk management procedures for lenders.
This policy directly impacts SBA lenders and CDCs by mandating updated environmental due diligence standards, requiring adherence to the latest ASTM guidelines and potentially increasing the scope and cost of environmental assessments for SBA-backed loans.
Inflation Reduction Act (IRA) 2022 - Green Building Tax Credits and Incentives
The IRA introduces significant tax credits and incentives for energy-efficient commercial buildings and renewable energy projects, encouraging green building practices and climate-resilient development.
This policy will drive demand for new types of due diligence, such as carbon footprint assessments and climate risk reports, as investors and owners seek to capitalize on incentives and meet evolving sustainability standards, increasing the scope of services needed for CRE transactions.
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