AI Jitters Hammer Office REITs, Brokers in Two-Day Rout

AI isn’t only coming for everyone’s jobs, it also came for commercial real estate stocks this week.

Office landlords and brokerage firms saw shares tumble for a second straight day on Thursday as investors fretted that rapid advances in artificial intelligence could shrink demand for office space, Bloomberg reported. The selloff, which began with brokerage stocks on Wednesday, spilled into real estate investment trusts the following day in what analysts are calling the latest “AI scare trade.”

Shares of CBRE Group plunged 8.8 percent Thursday, extending their two-day drop to 20 percent — the company’s steepest slide since 2020. CBRE stock slid again when trading opened on Friday, though by 12:35 PM EST, it was up more than 5 percent for the day.

Rival brokerages weren’t spared from the carnage, either. JLL shares fell 7.6 percent in the two-day timeframe, Cushman & Wakefield dropped 12 percent and Newmark fell by 4.2 percent; all three were trending upwards after the first few hours of Friday trading.

An index tracking office REITs declined 4.2 percent on Wednesday and Thursday. Among the biggest drags were SL Green, Cousins Properties, Kilroy Realty and BXP. But most were being held up on Friday by positive movement across most of the exchanges; that index was up nearly 4 percent as of midday.

The fear that caused the two-day malaise: widespread adoption of AI tools may translate into fewer office-using jobs, weakening already fragile leasing demand.

Jeffrey Langbaum of Bloomberg Intelligence said concerns about AI’s impact on office space have lingered for months, but Wednesday’s sharp drop in brokerage stocks triggered a broader pullback among landlords.

Investors’ anxiety intensified following the rollout of new AI products by Anthropic, fueling volatility across sectors. The ripple effect moved from software makers to private credit firms, insurers, wealth managers and now real estate services and logistics companies.

“The market is pricing in the potential for mass office-using job losses as a result of AI,” Jefferies analyst Joe Dickstein told Bloomberg.

Still, some on Wall Street caution that the reaction may be overdone. Morningstar’s Sean Dunlop described a “ready fire aim” mentality in financial services, where traders are punishing even modest earnings misses amid broader AI disruption concerns.

— Holden Walter-Warner