The commercial real estate sector has been reshaped in multiple ways in recent years, from the boom in e-commerce to the rise in remote working. Now a new force is making arguably the biggest impact of all — artificial intelligence.
AI's impact is being felt in multiple sectors, but commercial real estate might not immediately come to mind as an industry primed for disruption. After all, what's more "real" than the bricks and mortar of real estate.
Yet increasingly, commercial real estate services firms face a battle in convincing their clients they need as many humans to do the work as previously assumed, whether that be brokers negotiating office leases or managers guiding investment decisions.
Last month, the stocks of several leading commercial real estate service firms sank in a sell-off prompted by fears over the extent to which AI threatens to upend so-called knowledge sectors.
Companies such as CBRE, Jones Lang LaSalle and Cushman & Wakefield lost billions in market value over the space of two days in mid-February and the valuations have remained largely stagnant since.
According to Joe Dickstein, an equity research analyst with Jefferies, the panic is not tied to the idea that commercial real estate will become less valuable because of AI removing the need for office space, but mainly because of the sense that commercial real estate brokers — who advise and guide investors — will themselves become replaced by AI models.
"The fear is that these labor-intensive, intermediary businesses are ripe for disruption," he told DW. "There could be a secondary impact from the risk to office workers, but the primary concern relates to the durability of the advisory businesses."
Smarter investing?
For Francis Huang, the idea that an AI model could make better investment decisions than humans came to him during his time at Harvard University in 2019, when he wrote a research paper about autonomous private equity research systems.
"The question was, how can we use technology to push the efficiency — or in other words, the fees — lower?" he told DW.
Eventually, he and another researcher, Simon Mendelsohn, turned their academic ideas into a company, Apers AI. The company uses a specialized AI system to make investment decisions in institutional and commercial real estate.
He says that for large institutional investors, if they want to do 100 "good deals", they may need to consider up to 1,000 possible deals or even 10,000 possible deals before making their decisions as to where to invest.
That previously required huge labor from brokers and commercial real estate services. But according to Huang, much of the work can now be done in a very short space of time by AI models such as those developed by Apers.
"What we see today is that AI is automating more than 90% of these decisions," he said. "It's essentially their investment committee."
Other impacts
However, industry insiders say it's too simplistic to suggest that AI-driven investment models will simply replace existing real estate service providers.
"The data suggests the industry is treating it predominantly as an opportunity, while the threat is real for those who move too slowly," Yuehan Wang, global research director for real estate technologies at Jones Lang LaSalle, told DW.
She says that the threat to companies comes not from AI itself, but from a failure to adopt and adapt to the benefits of the technology.
"Investors are not treating AI as a defensive necessity but as a competitive weapon," she says, pointing specifically to the technology's capacity to refine investment decisions. "Market trend analysis, risk modeling, portfolio optimization, and automated valuation are among the top applications being pursued."
The impact of AI on commercial real estate is not only related to models that make investment decisions, however.
Another major trend in commercial real estate related to AI is data centers. Massive demand for computing power, driven by AI, has led to a data center building boom.
Then there's the trend of AI companies renting office space, something Wang says is "a visible and measurable counterforce" to other trends such as remote working.
Tech firms accounted for around 20% of US office leasing in the first half of 2025, up from around 10% in 2022. Growing demand for office space from the tech sector has reversed vacancy trends in New York and San Francisco.
Human connection
For Francis Huang at Apers AI, he doesn't see the rise of AI in commercial real estate services as a "replacement" of existing models, but rather as an "upgrade" which simply allocates capital more efficiently.
"The game is that capital always finds the most efficient layer," he says.
He also plays down the idea that AI innovation across sectors will lead to less and less demand for workers, leading in turn to a fall in demand for office space and commercial real estate itself.
"The value of real estate comes from the highest and best use of the land," he says, adding that as needs change, demand evolves to fit whatever the best use of land may be in terms of return for investors.
He gives the example of Kendall Square, a district in Cambridge, Massachusetts, which was once an area of heavy industry before evolving into what now houses research facilities for the Massachusetts Institute of Technology as well as multiple pharma and biotechnology firms.
Yuehan Wang says we are only at the beginning of the cycle of AI transforming the sector. Only after a period of workflow redesign and business model disruption will the "paradigm-level change" of 2030 and beyond become apparent, he says.
Yet many believe that while that paradigm shift is coming, commercial real estate will remain a sector in which human relationships always count.
"The panic is not justified," says Joe Dickstein of Jefferies. "These companies [commercial real estate services] possess proprietary data that is not accessible to an AI entrant. It is a deeply interpersonal business, and we do not expect that to change meaningfully in the AI era."
