Artificial intelligence is reshaping how work is done in office-based industries, with implications that extend directly to commercial office demand. A recent Newmark report cited in Connect CRE notes that AI is simultaneously boosting productivity and threatening certain categories of jobs, and that its effects will vary across sectors, occupations and skill levels.
Newmark analysts describe AI as a force that is already automating routine tasks and, at its most powerful, driving broader creative disruption. They compare the current debate around AI to earlier periods of technological anxiety, such as the rise of e-commerce and pandemic-era fears of a permanent collapse in office usage. In both of those earlier episodes, they argue, the most extreme predictions did not materialize.
The report concludes that AI is not a short-lived phenomenon, pointing out that 88% of firms surveyed already use some form of AI, although only 38% have progressed beyond early-stage adoption. The lag is attributed to distrust of the technology, unclear governance frameworks and regulatory complexity that slows broader deployment.
In the near term, Newmark expects labor disruption as AI diffuses through office-using sectors, with a more stable equilibrium emerging over roughly five years. Over time, the analysts anticipate that new firms, products and job categories will be created, which could offset the initial negative demand shock associated with automation.
The report highlights that displacement risk is not uniform. Higher-skilled roles are more likely to use AI as a productivity tool, while entry-level and highly automatable office-using positions are more exposed, especially in back-office functions. This uneven impact could influence how different segments of the office inventory perform.
Newmark’s base case forecast calls for modest office-using employment growth of 0.3% between 2026 and 2030. The analysts observe that, since at least 1944, five-year periods of flat or declining office-using employment have been rare and typically coincide with recessions, which their outlook does not assume. Even so, they expect AI, combined with slower hiring, to nudge office vacancy up by about 10 basis points between the end of 2025 and 2030.
Rather than triggering a wholesale restructuring of the office sector, AI is expected to gradually dampen overall office space utilization. Within that context, Newmark suggests that high-quality, collaboration-oriented office environments should prove comparatively resilient, while more commodity space faces greater risk.
For investors, the report emphasizes that building quality and location will become more important differentiators as AI-enabled employees generate higher productivity from the office. Agglomeration economies, where innovative firms and talent cluster, are described as long-term “fortress markets” in which well-located assets may remain in stronger demand.
On the occupier side, Newmark advises tenants to prioritize flexibility in both lease structures and layouts, given uncertainty around how AI will ultimately shape headcount and work patterns. The report recommends modular, easily reconfigured space, shorter lease terms where possible, and options for both expansion and contraction, including the use of flex space.
The analysts also encourage occupiers to align real estate strategy with their workforce and automation plans. They note that AI-enabled workforce planning tools can help organizations identify which roles are most exposed to automation, where those employees sit and where portfolio flexibility should be concentrated, linking corporate real estate decisions more tightly to technology and talent strategies.
