As commercial real estate investors grapple with post-pandemic office vacancies, CBRE Investment Management is preparing for office demand in some cities to be further weakened by the impact of artificial intelligence on the workforce.
“If we lose 25% of our jobs in the United States — think coding, secretarial, sales and sales-related roles — what is that downstream impact going to be on offices?” Julie Ingersoll, CIO of Americas direct real estate strategies at CBRE Investment Management, said while speaking at a real estate event hosted by the firm in Manhattan.
“There will be some benefit, some new AI employment, but the downstream impact of AI is something we’re studying very carefully and using to pick the markets of the future and potentially deemphasize some of those markets where they’re most at risk.”
AI’s impact also reaches jobs within real estate itself. “One of our student housing partners this year did 60% of their leasing using AI — not a single human interaction was required for an entire school year across the country for student housing leasing,” Ingersoll said.
The office availability rate in Manhattan hit 18.1%in the first quarter, a record high for the borough. CBRE has estimated Chicago’s office vacancy rate to be as high as 25%. But rather than the Big Apple or Windy City, office space in the nation's capital will be hit hardest by AI’s replacement of human jobs, CBRE predicts.
“One market we’re looking at is Washington, D.C. There’s a lot of regulatory administration, processing roles, coding jobs,” said Ingersoll. “When you look at the most at-risk jobs from AI, and you then screen your markets to see where those jobs are predominantly located, D.C. screens to the top.”