A new analysis from Cushman & Wakefield finds that artificial intelligence (AI) is projected to add 330 million square feet of additional commercial real estate (CRE) demand nationwide over the next decade.
The study—“AI Impact on Commercial Real Estate: The Next 10 Years”—also provides more than a forecast. It provides four scenarios detailing different paths for AI adoption, productivity, and labor market outcomes:
- C&W Baseline—Gradual Adoption (50% probability): This baseline scenario has the highest probability, with steady economic expansion supported by moderate productivity gains. The implication is CRE demand recovers unevenly, with near-term softness in select sectors;
- Productivity-Led Expansion (15% probability): The upside scenario is rapid AI adoption drives strong economic growth and job creation. The implication is broad growth across sectors supports rent growth and rising values;
- AI Bust—Moderate Recession (25% probability): This downside scenario centers around AI adoption falling short of expectations, contributing to a cyclical downturn. The implication is weakened demand in the near term with higher vacancies and rent pressure, followed by recovery; and
- Dystopic/Displacement (5% probability): The other downside scenario is that AI adoption replaces more labor than expected, leading to higher unemployment. The implication is weakened demand for a longer period with downside pressure on rents and values.
According to Cushman & Wakefield, in the baseline scenario, AI-driven productivity gains produce a faster-growing economy that generates more demand for space. Total net absorption over the next decade rises from a pre-AI forecast of 2.7 billion square feet to just over 3 billion square feet through 2035, a net increase of 330 million square feet. The study finds a broad-based uplift, with industrial leading with an additional 298.5 million square feet, followed by office, 24.4 million square feet; multifamily, 94,000 units; and retail, 6.7 million square feet.
“The headline from this research is clear: AI will be disruptive, and there will be some displacement, but it will also create new businesses, which we are already seeing in this data,” said chief economist Kevin Thorpe. “Ultimately, AI is an additive to real estate demand. Productivity gains don’t shrink the economy; they expand it. Companies produce more at lower cost, margins improve, wages rise, and that broader growth flows through to space demand across every sector.”
When looking at the CRE sectors, the study finds an uneven pattern of impact.
With constraints in the for-sale market reinforcing rental demand, multifamily benefits indirectly through stronger job and income growth. In addition, the study notes Class A product in talent-dense markets is positioned to outperform.
Office markets are most sensitive to AI-driven changes and are most exposed to scenario-driven variability, while industrial demand is the strongest beneficiary with automation, supply chain reconfiguration, and consumer spending driving an additional 298.5 million square feet of absorption. Retail is more insulated from disruption than it was from e-commerce, but the market becomes more polarized. Mid-tier retail is under pressure, while experiential, service-oriented formats, such as food and beverage, health and wellness, and entertainment, continue to gain share.