Artificial intelligence will increase productivity, leading to greater efficiency and higher output. And, artificial intelligence will steal jobs, negatively impacting the labor force.
According to a recent Newmark report, both sides of the AI debate are true, adding that “there is broad consensus that AI’s impact on employment will vary across industry sectors, occupations and skill levels, but disagreement on the scope of those impacts.”
In its report, Newmark analysts cut through the noise, explaining likely employment scenarios and their impact on office space.
It Isn’t Going Away
There’s no putting the AI genie back in its bottle; 88% of firms said they use AI, but only 38% have moved beyond the early stages. The reasons for the lag include distrust of the technology, unclear governance and regulatory complexity.
Additionally, the report observed that AI has started to automate routine tasks at the minimum and “drive creative disruptions” at the maximum. However, there have been such disruptions—and fears of it—in the recent past.
“Early pandemic fears of an ‘office collapse,’ which echoed the ‘death of retail that accompanied the rise of e-commerce over a decade ago, were ultimately overstated in both cases,” the Newmark analysts explained. “Likewise, current conversations around AI and automation risk seem to be mirroring that pattern.”
As such, the near-term future of AI will be labor disruptions, with the technology settling in by the five-year mark. “Over time, we expect new firms, products and occupations to emerge, offsetting the initial negative demand shock from AI,” the report said.
But not all jobs will be unscathed. While AI will become a viable tool among higher-skilled positions, “near‐to medium‑term displacement risk is concentrated in entry‑level and highly automatable office‑using roles, heightening exposure for back‑office functions,” the analysts explained.
What it Means for Commercial Real Estate
Newmark’s base forecast indicated that office-using employment growth will be 0.3% between 2026 and 2030. However, “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.” According to the analysts.
Newmark also anticipates that AI, combined with slower hiring, could push office vacancy by 10 basis points from the end of 2025 to 2030. However, these broad numbers hide underlying factors.
“As AI is more likely to dampen overall office space utilization rather than trigger wholesale upheaval, high‑quality, collaboration‑oriented office settings will be comparatively resilient, while commodity space will be more vulnerable,” the report explained.
Takeaways for Owners and Operators
Newmark researchers concluded their AI write-up with the following insights for industry professionals.
Investors
Quality office is critical. The increased productivity of office-using jobs using AI means that “location and quality become not only drivers of returns but key differentiators for outperformance,” the report said.
Agglomeration matters. Agglomeration economies, representing innovative industry clusters, will “act as fortress markets in the long run,” the Newmark analysts pointed out. Assets within and near these economies tend to be in higher demand.
Occupiers
Focus on flexibility. AI will likely reshape headcount and work patterns, but in what way remains uncertain. “Occupiers with upcoming lease expirations should prioritize modular, easily reconfigurable layouts and greater lease flexibility, including shorter terms, expansion and contraction options, and the use of flex space,” the report advised.
Align real estate strategies with workforce and automation approaches. The Newmark analysts suggested pairing lease and portfolio decisions with AI and workforce transition roadmaps. Additionally, “AI-enabled workforce planning tools can help identify which roles are most exposed, where they are located and where flexibility should be prioritized,” the report pointed out.
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