AI threatens office demand! Commercial real estate experiences panic selling, as giant CBRE Group, Inc. Class A (CBRE.US) declines 20% over two days.

Notice that, due to concerns that the wider use of artificial intelligence tools by traders could impact demand for office buildings, commercial real estate stocks plummeted on Thursday, further extending the partial sell-off that began on Wednesday. Shares of major commercial real estate services company CBRE Group, Inc. Class A (CBRE.US) fell by 8.8%, with a two-day cumulative drop of 20%, marking its worst performance since 2020. Jones Lang LaSalle (JLL) (JLL.US) dropped by 7.6% on Thursday, Highwoods Properties Inc. fell by 12%, and Newmark Group (NMRK.US) slipped by 4.2%. The index tracking office real estate company stocks fell by 4.2%. Major decliners in this index include SL Green Realty Corp., Cousins Properties Inc., Kilroy Realty Corp., and BXP Inc. REITs analyst Jeffrey L. Baum stated, "Concerns about a decrease in office demand due to the increasing use of artificial intelligence applications have been around for some time. This is not a new issue, however, following the sell-off of broker stocks yesterday, we are seeing these concerns spreading to actual office space providers." Real estate stocks continued to decline for a second consecutive day. The two-day sell-off in real estate stocks is being referred to by analysts as the latest example of "AI flight to safety" trading. Morningstar analyst Sean Dunlop said, "In the overall financial services sector, we are in a 'ready to fire at any time' environment. Given the widespread concerns about AI disruption, investors are even reacting strongly to slight underperformance." Investor concerns about AI disrupting business models intensified after the startup company Anthropic introduced new tools. This resulted in significant sell-offs across various sectors of the stock market in recent weeks, starting with software manufacturers and then spreading to private credit companies, insurance companies, wealth management companies, real estate services, and logistics companies. "The market is digesting the potential risk of AI leading to a loss of jobs that heavily rely on office spaces," said Jefferies Financial Group Inc. analyst Joe Dickstein. On the other hand, analysts and investors cautioned that some recent aggressive sell-offs reflect knee-jerk reactions from traders and may overestimate the related risks.