The commercial real estate sector has been reshaped in many ways in recent years, from the boom in e-commerce to the rise in remote work. Now, new forces are perhaps having the most impact. It’s artificial intelligence.
The impact of AI is being felt in multiple sectors, but commercial real estate may not immediately come to mind as an industry primed for disruption. After all, there are things more “real” than the substance of real estate.
But commercial real estate services companies are increasingly struggling to convince clients that they need as many people as possible to do the tasks they were previously supposed to do, such as brokers negotiating office leases and managers guiding investment decisions.
Last month, the stock prices of several large commercial real estate services companies plummeted on concerns that AI could drastically change the so-called knowledge sector.
Companies like CBRE, Jones Lang LaSalle, and Cushman & Wakefield lost billions of dollars in market value over a two-day period in mid-February, and their valuations have remained largely stagnant ever since.
According to Joe Dickstein, an equity research analyst at Jefferies, this panic is not tied to the idea that AI will reduce the value of commercial real estate by eliminating the need for office space, but rather a sense that commercial real estate brokers, who primarily advise and guide investors, will themselves be replaced by AI models.
“The concern is that these labor-intensive brokerage businesses are ripe for collapse,” he told DW. “While there may be a secondary impact of risks to office workers, the biggest concerns relate to the sustainability of the advisory business.”
A smarter investment?
For Francis Huang, the idea that AI models could make better investment decisions than humans came to him in 2019 while at Harvard University, when he wrote a research paper on autonomous private equity research systems.
“The question was: How can we leverage technology to drive efficiency, and thus lower prices,” he told DW.
Eventually, he and another researcher, Simon Mendelsohn, turned their academic idea into a company called Apers AI. The company uses specialized AI systems to make investment decisions in institutional and commercial real estate.
For large institutional investors, he says, if they want to make 100 “good trades,” they may need to consider up to 1,000 or even 10,000 possible trades before deciding where to invest.
Previously, this required a lot of effort from brokers and commercial real estate services. But now, Huang says, AI models like the one developed by Apers can do much of the work very quickly.
“What we’re seeing today is that AI is automating over 90% of these decisions,” he said. “It’s essentially their investment committee.”
Other effects
However, industry players say it is naive to think that AI-driven investment models will simply replace existing real estate service providers.
“While the data suggests that the industry sees it primarily as an opportunity, the threat is real for those who move too slowly,” Yuehan Wang, global research director for real estate technology at Jones Lang LaSalle, told DW.
She says the threat to businesses comes not from AI itself, but from a failure to adopt and adapt to the benefits of the technology.
“Investors are treating AI as a competitive weapon rather than a defensive necessity,” she says, pointing specifically to the technology’s ability to refine investment decisions. “Market trend analysis, risk modeling, portfolio optimization, and automated valuation are among the top applications being pursued.”
However, the impact of AI on commercial real estate is not just about models that make investment decisions.
Another big trend in commercial real estate related to AI is data centers. The massive demand for computing power from AI is driving a data center construction boom.
Additionally, there is a trend for AI companies to rent office space, which Wang says is a “tangible and measurable counterweight” to other trends such as remote work.
The share of high-tech companies in US office leasing in the first half of 2025 increased from about 10% in 2022 to about 20%. Rising demand for office space from the tech sector has reversed vacancy trends in New York and San Francisco.
connections between people
For Francis Huang of Apers AI, the rise of AI in commercial real estate services is not a “replacement” of existing models, but simply an “upgrade” that allocates capital more efficiently.
“Capital is always a game of finding the most efficient layer,” he says.
He also downplays the idea that AI innovations across sectors will lead to less demand for workers and, in turn, less demand for office space and commercial real estate itself.
“The value of real estate comes from making the highest and best use of the land,” he said, adding that as needs change, demand evolves to match whatever is the best use of the land in terms of return to investors.
He cites the example of the Kendall Square neighborhood in Cambridge, Massachusetts. This area was once a heavy industry district, but today it is home to research facilities for the Massachusetts Institute of Technology and several pharmaceutical and biotech companies.
Yuehan Wang says we are just at the beginning of a cycle in which AI will transform the field. Only after a period of workflow redesign and business model disruption will we see “paradigm-level changes” beyond 2030, he says.
But many believe that while that paradigm shift is coming, commercial real estate will always remain a relationship-driven field.
“The panic is not justified,” said Jefferies’ Joe Dickstein. “These companies [commercial real estate services] Possess proprietary data that AI entrants cannot access. This is a very human-based business, and I don’t expect that to change much in the AI era. ”
Editor: Christy Pradson
