Shares of commercial property services companies have experienced a significant decline as market concerns about the disruptive potential of artificial intelligence (AI) escalate. Following a steep drop in Wall Street’s markets, European stocks within the sector also faced fallout on Thursday.
In London, Savills, a prominent estate agent, saw its shares plummet by 7.5%. Similarly, International Workplace Group, known for its Regus brand, experienced a 9% downturn. The UK’s leading property developers, British Land and Landsec, reported losses of 2.6% and 2.4% respectively.
On Wall Street, the downward trend continued for property service firms, marking the second successive day of losses. CBRE’s shares fell sharply by 12.5%, while Jones Lang LaSalle declined nearly 11%. Cushman & Wakefield noted a 9.1% drop, following even steeper declines the previous day.
The commercial property sector is the latest to be adversely affected by fears regarding the ramifications of rapid advancements in AI technology. Initially, the sell-off began with companies in legal software, publishing, analytics, and data sectors, extending recently to include insurance firms, price comparison sites, and wealth management companies.
The sell-off was prompted by new releases from AI companies like Anthropic, including updates on its chatbot, Claude. However, analysts noted that the absence of substantial news on Thursday suggested that the market overreacted. The growing capabilities of AI raise concerns about the potential automation of numerous office-based tasks, which could lead to widespread job losses and a decline in office demand, adversely impacting property firms.
Jade Rahmani, a commercial real estate analyst at Keefe, Bruyette & Woods, indicated that investors are pivoting away from high-fee, labor-intensive business models perceived as vulnerable to AI disruption. Despite the significant sell-off, Rahmani posited that the immediate risks to complex deal-making may be overstated, although the long-term effects of AI warrant careful observation.
Amidst the downturn, CBRE released its fourth-quarter financials on Thursday, reporting a revenue increase to $11.6 billion (£8.5 billion), marking a 12% rise, with core earnings per share of $2.73 surpassing analysts’ predictions. For 2025, revenues surged by 13% to $40.6 billion. The company projected its 2026 profit to exceed Wall Street expectations, attributing this optimism to robust growth in leasing and facilities management, fueled by a rapid expansion of data centers and substantial investments in AI infrastructure.
CBRE’s CEO, Bob Sulentic, expressed a long-term optimistic outlook on AI’s integration into their business. He emphasized that the company’s transaction and investment operations are “most protected” from disruption. He stated, “Clients engage CBRE to plan and execute complex transactions because of our creativity, strategic thinking, negotiating skills, deep base of market knowledge, and broad relationships. None of this seems likely to be replaced by AI in the foreseeable future.”
