Artificial intelligence (AI) will be transformative and disruptive for the labor market, with far‑reaching implications for commercial real estate demand and workplace design. This report examines AI’s potential impact on office‑using employment and explores how AI‑driven workforce shifts could shape U.S. office demand by 2030.
Public opinion on AI is internally conflicted, with excitement about its potential running alongside persistent worries about its disruptive impact on jobs. 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. Today, the rapid expansion of established and emerging AI and AI‑enabled firms is driving new office demand in select tech hubs, most notably the San Francisco Bay Area. Over the next five years, as adoption accelerates, AI is likely to moderate labor‑driven office demand by enabling greater output with fewer employees.
Over time, we expect the negative demand shock from AI implementation in office-using industries to be offset by the emergence of new firms, products and occupations. This pattern is consistent with earlier waves of labor‑saving technological change (for example, personal computers replacing typists, automobiles replacing horse‑drawn transport and telephones displacing telegraph and mail carriers).
There are reasons to be optimistic: the recent surge in new business formation suggests that the lag between labor substitution and the emergence of new patterns of trade may be shorter this time. AI will likely amplify the office market transformation set in motion by hybrid work, intensifying the flight to quality and refining how and when employees engage with the workplace.
It will influence which space types deliver the greatest value for in‑person collaboration and guide the design of more efficient, adaptable work environments. For occupiers, AI offers a powerful tool for optimizing workplace strategy and sharpening their competitive edge. For investors, it will create targeted opportunities, particularly in markets and assets aligned with emerging AI‑driven demand patterns.
Key Findings
- Moderate headwind for labor, not upheaval: AI will likely act as a moderate headwind to labor‑driven office demand through 2030, tempering growth without upending the market; instead, it will reshape where and how space is used.
- New AI-driven office demand hubs: In the immediate term, AI and adjacent industries such as cloud and data infrastructure, semiconductors and specialized hardware are generating new office demand. The surge is concentrated in the San Francisco Bay Area and is spreading into major talent markets including but not limited to Manhattan, Seattle, Los Angeles and Austin.
- Entry level knowledge roles most exposed: Near‑to medium‑term displacement risk is concentrated in entry‑level and highly automatable office‑using roles, heightening exposure for back‑office functions. Conversely, higher‑skill and relationship‑driven office roles are more likely to be augmented by AI rather than replaced. 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.
- Expect office softening, not a collapse: Under our “base case” scenario, AI slows office‑using employment growth by about 2.1 percentage points by 2030 relative to a non‑AI trajectory and pushes vacancy up by roughly 120 basis points from year‑end 2025. To reflect the uncertainty around how quickly firms aopt AI and how aggressively they reshape workforces and real estate portfolios, we also offer four alternative scenarios that bracket this outlook under different assumptions about AI adoption, productivity gains and labor substitution.
- Strategic imperative for CRE stakeholders: Occupiers will need flexible, purposefully designed workplaces that prioritize collaboration, culture, wellbeing and talent attraction as AI reshapes job structures and space needs. For owners, portfolio resilience will depend on curating high‑quality assets in prime locations with durable, innovation‑aligned tenant mixes that drive long‑term outperformance and limit downside risk.
Part 1:
Labor Trends & AI's Workforce Impact
AI, Fear and Familiar Patterns of Disruption
Intense hype around AI‑driven productivity gains has been accompanied by genuine fears about job displacement, echoing anxieties from past technological transitions. Ultimately, the outcomes will depend on several factors, including the pace of AI adoption, the balance between task augmentation and automation for various occupations, how firms choose to apply productivity gains and how demand for goods and services evolves.
Pace of Adoption - AI’s impact on jobs will depend on how quickly and how deeply organizations move from AI pilots to fully redesigned workflows. Today, the barrier to realizing AI’s potential lies not just in the technology itself, which is improving at a rapid pace, but in the slow pace of scaled adoption, due to factors including distrust, regulatory complexity and unclear governance and risk standards. McKinsey’s 2025 global AI survey finds that while 88% of organizations use AI in at least one business function, 62% remain in experimentation or pilot mode, and only about one‑third have begun to scale AI across the enterprise, primarily among larger firms with more than $5 billion in revenue. Similarly, a recent Anthropic report comparing theoretical task exposure with observed usage on its Claude platform finds a wide gap between theoretical capability and adoption. In computer and math occupations, for example, large language models could theoretically perform 94% of job tasks in that category, yet current usage covers only about 33%. Despite this early stage, business leaders are betting on fast and far-reaching change. The 2025 World Economic Forum (WEF) Future of Jobs report reveals that 86% of employers expect AI and information-processing technologies to transform their business by 2030, suggesting today’s pilots are laying the foundation for large‑scale change.
Figure 1: Reported use of AI by respondents' organizations, % of respondents
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