Real estate stocks plunge as AI disruption fears trigger panic over office space demand

Real Estate Stocks Sink on Worry About AI Risk to Office Demand

Analysts describe the selloff as part of the "AI scare trade", with some warning that the selling may be overestimating the risks of AI disruption. Commercial real estate stocks nosedived Thursday as traders worried about risk to demand for office space from higher use of artificial intelligence tools, broadening a selloff that began Wednesday in small corner of the market. Shares of CBRE Group Inc., a major commercial real estate services company, fell 8.8%, bringing the two-day decline to 20% in the worst such move since 2020. Jones Lang LaSalle Inc. fell 7.6% Thursday, Cushman & Wakefield Ltd. dropped 12% and Newmark Group Inc. slid 4.2%. An index tracking stocks of office real estate companies retreated 4.2%. Major decliners in the index include SL Green Realty Corp., Cousins Properties Inc., Kilroy Realty Corp. and BXP Inc. "Concerns about increased use of AI applications translating into reduced demand for office space have been around for some time, this is not new," said Jeffrey Langbaum, an analyst covering office REITs for Bloomberg Intelligence. "However, after yesterday's selloff in the brokers, we are seeing the fear spill back over to the actual office space providers." The two-day selloff across real estate stocks is among the latest in what analysts are calling the "AI scare trade." "We're in a bit of a 'ready fire aim' environment in financial services in general, with investors reacting sharply to even modest earnings misses given widespread fears of AI disruption," Morningstar's Sean Dunlop said. Investors' concerns about AI disrupting business models have intensified following the rollout of new tools by startup Anthropic. It has led to steep selloffs in several corners of the stock market over the past couple weeks -- starting with software makers, then moving to private credit companies, insurers, wealth managers, real estate services and logistics firms. "The market is pricing in the potential for mass office-using job losses as a result of AI," said Jefferies analyst Joe Dickstein. On the other hand, analysts and investors have warned that some of the recent steep selling reflects a knee-jerk reaction from traders and could be overestimating the risks.

Office real estate stocks tumble as AI disruption casualties in the stock market grow by the day

That selloff reflects a grim mood as of late in the market, which has rotated sharply out of those companies most exposed to AI disruption -- first in software, then in financial firms. Real estate stocks have become the latest victim of the artificial-intelligence threat. Commercial real estate brokers are selling off for a second straight day. CBRE tumbled 13.5% in midday trading, a drop that Oppenheimer pointed out as especially alarming given that the only other times the stock has tumbled further was during Covid and the height of the global financial crisis. Jones Lang LaSalle fell 12.5% and Hudson Pacific Properties shed about 8%. In addition, Newmark slipped nearly 11%, while SL Green Realty dropped about 9% and BXP shed 4%. "We believe investors are rotating out of high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption," Jade Rahmani, an analyst at Keefe, Bruyette & Woods, said in a note Wednesday. CBRE YTD mountain CBRE year to date That selloff reflects a grim mood as of late in the market, which has rotated sharply out of those companies most exposed to AI disruption -- first in software, then in financial firms -- for more defensive sectors such as staples. On Thursday, trucking and logistics stocks also tumbled on the release of an AI freight scaling tool. Shares of C.H. Robinson Worldwide and RXO plummeted 23% and 25%, respectively. Shares of J.B. Hunt Transport Services slid more than 8%. Now, investors are on the lookout for what sector will be the next domino to fall, and how long any panic selling can last. AI disrupting employment Commercial real estate has been under pressure for some time, as higher interest rates and the rise of remote and hybrid work in the wake of the pandemic cratered demand for office space. Investors worry that AI could sound a death knell for the sector. That point was driven home in an essay that went viral earlier this week in which OtherSide AI co-founder and CEO Matt Shumer said entry level white collar jobs will be gutted thanks to AI. The impact will be bigger than Covid, he wrote. The essay garnered 30 million views in 24 hours, Shumer claimed. Those remarks follow Elon Musk's comments on a podcast last week in which he said that office towers once filled with workers will one day be replaced with AI. "Corporations that are purely AI and robotics will vastly outperform any corporations that have people in the loop. Computer used to be a job that humans had. You would go and get a job as a computer where you would do calculations. They'd have entire skyscrapers full of humans, 20-30 floors of humans, just doing calculations. Now, that entire skyscraper of humans doing calculations can be replaced by a laptop with a spreadsheet," Musk told the hosts of the "Dwarkesh Podcast" last week. "That spreadsheet can do vastly more calculations than an entire building full of human computers," Musk added. SLG YTD mountain SL Green, YTD The rout in real estate stocks comes on the heels of several other sectors being dragged down by AI disruption concerns. Software stocks took a hit earlier this year after Anthropic's latest AI mode l appeared able to allow businesses to do legal work and build programs for which they would otherwise pay an expensive license. Then wealth management stocks dove after the launch of tech platform Altruist's new tax planning tool AI powered that promises to do the work "within minutes." Fears overblown? Even so, many investors expect that the recent concerns could be overblown. Indeed, in spite of all the noise, fundamentals in real estate remain strong, Rahmani noted. "While the threat of technology disintermediation is not new to the industry, the current sell-off may overstate the immediate risk to complex deal-making, even as the long-term AI impact remains a 'wait-and-see,'" he wrote. In fact, CBRE reported an earnings beat on Wednesday for its fourth quarter and issued strong guidance for the full year. Its core earnings came in at $2.73 per share, topping the consensus estimate of $2.68 a share, per FactSet. The company expects core EPS to come between $7.30 to $7.60, versus the $7.39 expected from analysts. CBRE CEO Bob Sulentic pushed back against the perception that the company's core businesses will be disrupted by AI, saying that the firm has built cost-effective AI tools to aid, but not disrupt, the work of its brokers. He added that much of the transactions CBRE oversees are complex, requiring the firm's deep knowledge and breadth of relationships in the field. "We've become quite confident that that business really is driven by this strategic creative thinking that our brokers do," Sulentic said during the company's earnings call. "And we think that's going to continue to be the case, and we haven't seen any evidence to the contrary." Barclays analyst Brendan Lynch is sticking with his overweight ratings on CBRE and Newmark and would buy the weakness. "We see the harsh sell-off among the group as inconsistent with their earnings profiles," he said in a note Wednesday. "We do not dismiss this risk, but note that thus far AI has been a net job creator," he wrote. "Further, CRE servicers stand to benefit, like many other companies, from both revenue growth opportunities and cost synergies." However, there could be long-term implications for businesses that don't shift from using AI as another tool in their toolboxes to a core operating infrastructure of new business models, said Macquarie strategist Thierry Wizman in a note Thursday. For instance, for financial services and real estate companies, outcome-driven AI agents would conduct all the end-to-end workflow, replacing the human-led ones, he said. "[F]or companies that are slow to adopt, or have built customer models based on costly human-level discretion and interaction, that transition may be fatal," he said.

Share values of property services firms tumble over fears of AI disruption

But despite second day of declines on Wall Street, analysts say sell-off 'may overstate immediate risk to complex deal-making' of AI Shares in commercial property services companies have tumbled, in the latest sell-off driven by fears over disruption from artificial intelligence. After steep declines on Wall Street, European stocks in the sector were hit on Thursday. The estate agent Savills' shares fell 7.5% in London, while the serviced office provider International Workplace Group, which owns the Regus brand, lost 9%. The UK's two biggest property developers, British Land and Landsec, dropped 2.6% and 2.4% respectively. On Wall Street, property service firms fell for a second consecutive day. CBRE shares plunged 12.5%, Jones Lang LaSalle lost nearly 11% and Cushman & Wakefield fell 9.1%, after even sharper declines on Wednesday. Commercial property stocks have become the latest sector to be hammered by fears over the impact of rapid advances in AI, as the sell-off spread from legal software, publishing, analytics and data companies last week to insurance firms, price comparison sites and wealth managers this week. The share declines were sparked by AI firms such as Anthropic, the company behind the chatbot Claude, releasing new tools, although there was limited news on Thursday, leading analysts to argue that the sell-off was overdone. AI has the potential to automate a wide range of office-based tasks and could lead to swathes of job losses. There are also concerns among investors that demand for offices could fall, in a blow to property companies. Jade Rahmani, commercial real estate analyst at Keefe, Bruyette & Woods, said: "We believe investors are rotating out of high-fee, labour-intensive business models viewed as potentially vulnerable to AI-driven disruption." However, he believes that the sell-off "may overstate the immediate risk to complex deal-making, even as the long-term AI impact remains a 'wait-and-see'". Dallas-based CBRE on Thursday reported fourth-quarter revenue of $11.6bn, up 12%, and core earnings per share of $2.73, above analysts' estimates. In 2025, revenues rose by 13% to $40.6bn. The real estate services firm forecast 2026 profit above Wall Street estimates, on the back of strong momentum in leasing and facilities management, as the number of datacentres rapidly expands and billions of dollars flow into AI infrastructure. CBRE's chief executive, Bob Sulentic, believes AI will benefit the business in the long run, with its transaction and investment work "most protected" from disruption. "Clients engage CBRE to plan and execute complex transactions because of our creativity, strategic thinking, negotiating skills, deep base of market knowledge and broad relationships," he said. "None of this seems likely to be replaced by AI in the foreseeable future."

US' real estate stocks sink as worries about AI risks spread across Wall Street

Commercial real estate stocks nosedived Thursday as traders worried about risk to demand for office space from higher use of artificial intelligence tools, broadening a selloff that began Wednesday in small corner of the market. Shares of CBRE Group, a major commercial real estate services company, fell 8.8%, bringing the two-day decline to 20% in the worst such move since 2020. Jones Lang LaSalle fell 7.6% Thursday, Cushman & Wakefield dropped 12% and Newmark Group slid 4.2%. An index tracking stocks of office real estate companies retreated 4.2%. Major decliners in the index include SL Green Realty, Cousins Properties, Kilroy Realty and BXP. "Concerns about increased use of AI applications translating into reduced demand for office space have been around for some time, this is not new," said Jeffrey Langbaum, an analyst covering office REITs for Bloomberg Intelligence. "However, after yesterday's selloff in the brokers, we are seeing the fear spill back over to the actual office space providers." The two-day selloff across real estate stocks is among the latest in what analysts are calling the "AI scare trade." "We're in a bit of a 'ready fire aim' environment in financial services in general, with investors reacting sharply to even modest earnings misses given widespread fears of AI disruption," Morningstar's Sean Dunlop said. Investors' concerns about AI disrupting business models have intensified following the rollout of new tools by startup Anthropic. It has led to steep selloffs in several corners of the stock market over the past couple weeks -- starting with software makers, then moving to private credit companies, insurers, wealth managers, real estate services and logistics firms. "The market is pricing in the potential for mass office-using job losses as a result of AI," said Jefferies analyst Joe Dickstein. On the other hand, analysts and investors have warned that some of the recent steep selling reflects a knee-jerk reaction from traders and could be overestimating the risks.

How should investors position their portfolio for a spreading SaaSpocalypse? (CBRE:NYSE)

Believers in the SaaSpocalypse claimed their latest casualty on Wednesday, sending shares of real estate services deep into the red. Names like CBRE Group (CBRE), Jones Lang LaSalle (JLL), and Cushman & Wakefield (CWK Generative AI is triggering sharp selloffs in SaaS and real estate service stocks due to concerns over automation eroding high-fee business models. AI is threatening fee compression, margin decline, and potential job losses in high-fee sectors like legal, financial, and real estate services. Investors are advised to focus on resilient businesses capable of integrating AI, emphasizing balance sheet flexibility to navigate structural changes.

Here are the worst performing real estate services stocks as AI disruptions sink group (XLRE:NYSEARCA)

Real estate services stocks experienced a significant sell-off on Wednesday as investors assessed the sector's vulnerability to artificial intelligence disruption, triggering what analysts are calling an "AI scare trade." Major industry players including CBRE Group (CBRE), Jones Lang LaSalle ( The sell-off was triggered by investor concerns over AI disruption, particularly after Anthropic released new AI tools that could automate tasks in labor-intensive sectors, prompting rotation out of these stocks. Analysts believe high-fee, labor-intensive real estate business models are seen as potentially more vulnerable to AI automation, though some suggest the fears may be exaggerated based on limited current developments. Zillow's mixed Q4 results and weaker-than-expected Q1 guidance added to the sector's downturn, contributing to its shares being among the worst performers in the group.