"The 'next AI victim' has emerged: real estate service stocks are being sold off, marking the largest single-day drop since the pandemic."

Real estate services companies’ stock prices have plunged sharply, as investors are reassessing these firms’ vulnerability to the application and tools of artificial intelligence. On Wednesday, CBRE Group and Jones Lang LaSalle both saw their shares tumble 12%, while Cushman & Wakefield dropped 14%. For CBRE and Cushman & Wakefield, this marked the largest single-day decline since the market selloff during the pandemic in 2020. Wallstreetcn previously mentioned that software companies, private credit firms, wealth management institutions, and insurance brokers have all recently been hit by AI-related concerns and selloffs, and this is yet another sector within just over a week to fall into so-called “AI panic trading.” Keefe, Bruyette & Woods analyst Jade Rahmani said investors are pulling out of high-fee, labor-intensive business models, as these are viewed as likely to be vulnerable to AI-driven disruption. Analysts also pointed out that this selloff could be exaggerating the immediate risks AI poses to complex transaction businesses, with some of the selling pressure coming from concerns that AI will disrupt the job market and demand for commercial real estate. Commercial Real Estate Sector Faces Fresh Setbacks This round of selling brings new shocks to the commercial real estate industry. The sector has struggled to recover since the pandemic, with dramatic shifts in office demand and a high interest rate environment seriously suppressing transaction volumes. Although the AI boom has brought growth to certain specific areas—particularly data centers and high-end office leasing—investors are weighing whether AI advancement will ultimately pressure some lines of business by automating tasks and streamlining transaction processes. Companies like CBRE and Jones Lang LaSalle have sought to buffer the impact of market weakness by expanding their scope of services into property management, valuation, and investment sales, covering a range of sectors including hotels, warehouses, apartments, and life science laboratories. Market Reaction May Be Excessive Barclays analyst Brendan Lynch noted that, given limited news flow on the day, the share price declines seemed “excessive.” This analyst pointed out that some of the selling pressure stemmed from worries that AI would disrupt the labor market and demand for commercial real estate. Lynch remarked: “These are potential risks, but nothing has changed compared to yesterday.” The wave of panic intensified after AI startup Anthropic last week released a tool aimed at automating work tasks across fields ranging from legal services to financial research. Meanwhile, analysts and investors have warned that some of the sharp selloff reflects a knee-jerk reaction and may overestimate the actual risks. Jefferies analyst Joe Dickstein commented: “The threat of AI to leasing and capital markets businesses is limited. CBRE and its peers benefit from considerable scale advantages, including data and industry relationships. Their roles as major intermediaries in large leasing and transaction deals are unlikely to change.” Although analysts believe concerns about the immediate risks of AI may be overstated, Rahmani also acknowledged that the long-term impact of AI remains “to be seen.” Risk Disclosure and Disclaimer The market involves risks, and investment requires caution. This article does not constitute personal investment advice and has not taken into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views or conclusions in this article fit their specific circumstances. Investing accordingly is at your own risk.