Artificial intelligence is expected to seriously reconfigure commercial real estate over the next decade, but the size and speed of that transformation remain uncertain, according to a new Cushman & Wakefield report outlining four possible market scenarios.
The firm’s analysis concludes that the most likely outcome is one in which AI gradually boosts productivity and economic growth, strengthening demand for some property types while increasing pressure on others.
Office Demand Becomes More Selective
Cushman & Wakefield assigns a 50% probability to its baseline scenario, where businesses steadily adopt AI, initially slowing hiring as they integrate new technology before returning to growth.
Rather than reducing the need for offices altogether, the report projects demand will increasingly concentrate in high-quality, flexible buildings located in markets with strong talent pools. Lower-quality office properties are expected to face growing challenges as tenants prioritize premium space.
Faster AI Adoption Could Lift Multiple Property Sectors
In a more optimistic scenario, given a 15% probability, widespread AI adoption fuels productivity, business creation, and corporate investment.
That environment would strengthen demand beyond offices, supporting retail through higher consumer spending, boosting logistics as goods movement increases, and benefiting multifamily housing through stronger household incomes. Office vacancies would also fall more quickly as companies expand.
Downside Risks Remain
The report also explores a 25% probability scenario modeled after the dot-com era, where excessive investment in AI is followed by economic weakness and slower business expansion. Under those conditions, office properties would experience the greatest pressure as hiring slows and companies delay leasing decisions.
A fourth scenario, assigned a 5% probability, assumes AI displaces workers faster than new jobs are created. That outcome would keep office vacancies elevated for years while weakening demand across retail, logistics, and residential real estate as income growth slows.
Quality Becomes the Key Differentiator
Across all four scenarios, the report points to one consistent trend: AI is expected to widen the performance gap between high-quality, adaptable properties and older, less flexible assets.
Rather than eliminating demand for commercial real estate, Cushman & Wakefield concludes AI is more likely to redistribute it, with location, building quality, flexibility, and access to skilled workers becoming increasingly important drivers of long-term performance.
