Dive Brief:
- AI is a meaningful risk to office markets but its impact will be mixed based on the type and quality of offices, according to a report by Newmark.
- High-quality, collaboration-oriented office space will remain resilient while commodity space will be more vulnerable, Newmark said.
- “AI is more likely to dampen overall office space utilization rather than trigger wholesale upheaval,” Newmark said in the report. “High‑quality, collaboration‑oriented office settings will be comparatively resilient, while commodity space will be more vulnerable.”
Dive Insight:
AI has been seen as a threat to office markets because it’s expected to generate a rapid decline in white collar employment in sectors vulnerable to automation, which is expected to increase vacancy rates in class B and C offices, according to Cushman & Wakefield’s AI impact barometer.
Under its base case scenario, Newmark sees office-using employment growth remaining essentially flat, growing 0.3% between 2026 and 2030.
“This is more remarkable than it first appears. Since at least 1944, office-using employment has rarely been flat or declined in a five-year period — the Great Recession being the notable exception — and has never done so without an associated recession, which our forecast does not entail,” Newmark said in its report. Vacancy rates are expected to increase by about 10 basis points to 21.5% in 2030 under that base-case scenario, per the report.
In a moderate upside case, vacancy declines to 19.5% by 2030, compared with a projected 23.5% in the firm’s severe downside case.
“AI is a risk to the office outlook, and investors, occupiers, and municipalities should take this risk seriously,” the report says. “However … even under Newmark’s severe downside case, the associated dislocation is less severe than the pandemic driven hybrid work shock — a context that should temper the most pessimistic expectations.”
Many commercial real estate executives share that view. “I don’t want to come across as kind of naive about the threat which AI may offer, but for the time being, we don’t see any competitive pressure from outside of our industry coming to our industry,” JLL CEO Christian Ulbrich said on an earnings call.
“Every kind of company you can imagine is using their office space to attract talent and make talent more efficient and effective, and that’s created a lot of opportunity for us,” CBRE CEO Bob Sulentic said on the firm’s Q4 2025 earnings call. “In the long run, will there be less office users because AI disintermediates some of the work people do? That’s possible, but what we’re likely to see is a lot more AI-related workers back-fill other types of workers that may go away because of AI.”
The Newmark report says demand will continue to be concentrated in the highest-quality office space, especially if AI makes jobs more productive and increases competition for talent.
“Location and quality become not only drivers of returns but key differentiators for outperformance,” Newmark said. “In an AI-enabled workplace, time in the office will matter less for routine, heads-down tasks and more as a platform for high-value collaboration, mentoring, training, problem-solving and relationship-building,” it said.
Office design should support these behaviors by reducing desk density and increasing high-quality collaboration spaces, hospitality-driven multipurpose rooms and casual “collision” zones, the company said.
Hybrid workplaces will remain the norm, so occupiers will continue to prioritize modular, easily reconfigurable layouts. And they’ll continue to want lease flexibility — shorter terms, expansion and contraction options and the use of flex space.
