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

Commercial real estate stocks plummeted Thursday amid growing concerns that AI adoption could drastically reduce long-term office space demand, extending a selloff that began Wednesday in niche market segments. The decline reflects mounting investor anxiety over AI-driven remote work tools and automation replacing traditional office roles, potentially shrinking corporate real estate footprints permanently. Analysts note the selloff initially targeted specialized REITs before spreading to broader commercial property stocks, signaling systemic risk perceptions tied to AI’s workplace disruption. Market data shows office vacancy rates already near record highs, with AI acceleration threatening to exacerbate oversupply as companies prioritize cost-cutting over physical workspace investments. Traders now weigh whether AI’s productivity gains will outweigh its destabilizing effect on commercial real estate, a sector already grappling with post-pandemic hybrid work trends.