Cushman & Wakefield Report: AI to Add 330 Million Square Feet of CRE Demand Over Next Decade
New scenario-based analysis quantifies AI's impact across office, industrial, retail and multifamily, finding near-term adjustment in office but broad-based demand uplift over time
Artificial intelligence is projected to generate approximately 330 million square feet of additional commercial real estate (CRE) demand in the United States over the next decade, according to new analysis from Cushman & Wakefield (NYSE:CWK). The study, AI Impact on Commercial Real Estate: The Next 10 Years, is the first global, multi-sector, scenario-based assessment of how AI adoption will reshape real estate fundamentals across all major property types.
Rather than attempting to forecast how AI itself evolves, the framework focuses on how firms respond to AI under different adoption, productivity, and monetization scenarios, and how those responses translate into macroeconomic outcomes, space demand, and capital markets dynamics. Importantly, these scenarios are not analyzed in isolation; they are fully integrated into Cushman & Wakefield's standard "House View" forecasting process, reflecting the firm's broader macroeconomic outlook, including monetary policy, trade dynamics, and geopolitical risks.
Four Scenarios, Wide Range of Outcomes
The study models four distinct scenarios reflecting different paths for AI adoption, productivity, and labor market outcomes:
- C&W Baseline — Gradual Adoption (50%): Moderate productivity gains support steady economic expansion. Demand holds up, with near-term softness in select sectors, as AI becomes additive over time.
- Productivity-Led Expansion (15% probability): Rapid AI adoption drives strong economic growth and job creation. Broad demand growth across sectors supports rent growth and rising values.
- AI Bust — Moderate Recession (25%): AI adoption falls short of expectations, contributing to a cyclical downturn. Demand weakens in the near term, with higher vacancies and rent pressure, followed by recovery.
- Dystopic/Displacement (5%): AI adoption proves more labor-substituting than expected, leading to higher unemployment. Demand remains weak for a more sustained period, with downside pressure on rents and values.
AI Is Additive to Demand, Not a Substitute for Space
In the baseline scenario - assigned a 50% probability - AI-driven productivity gains produce a bigger, faster-growing economy that generates more demand for space, not less. Total U.S. net absorption over the next 10 years rises from a pre-AI forecast of 2.7 billion square feet to just over 3.0 billion square feet through 2035, a net increase of 330 million square feet, or 12.2%. The uplift is broad-based: industrial leads with an additional 298.5 million square feet (+13.3%), followed by office (+24.4 msf, +9.2%), multifamily (+94,400 units, +4.2%), and retail (+6.7 msf, +3.6%).
"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 the data," said Kevin Thorpe, Chief Economist at Cushman & Wakefield. "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."
Near-Term Drag, Long-Term Acceleration
AI's near-term impact is expected to moderate hiring as companies prioritize efficiency over headcount expansion. U.S. job growth is forecast to average 400,000–700,000 jobs annually through 2030 - roughly half the long-term average - before reaccelerating as AI-driven business formation creates new sources of employment.
Office-using employment will lag in the near term as businesses recalibrate and do more with existing teams. Over time, however, productivity gains, new business formation, and the emergence of new industries are expected to support renewed headcount growth.
"It's important not to lose sight of the supply side when assessing the outlook for office," said James Bohnaker, Principal Economist and co-author of the report. "The U.S. economy has historically delivered around 50 msf of new office product annually, but over the next few years, deliveries are tracking closer to just 5 msf. At the same time, AI will accelerate the bifurcation trend, with demand shifting toward high-quality, adaptable space. We are underbuilding the product the market needs most, which should put downward pressure on high-quality vacancy, even in a slower job growth environment."
Sector-by-Sector: Uneven Impact
The report finds that AI affects each property sector through different economic channels, producing an uneven and sequential pattern of impact:
Office is most sensitive to AI-driven change, given the concentration of high-wage, knowledge-based occupations and historically higher space intensity. Near-term outcomes reflect recalibration and elevated churn, but demand remains positive and becomes more durable over time. Results vary across scenarios, with greater dispersion and a rising premium on quality and flexibility.
Industrial demand is the strongest beneficiary, with automation, supply chain reconfiguration, and consumer spending driving an additional 298.5 million square feet of absorption. Requirements are shifting toward modern, power-intensive, flexible facilities, though most users have not yet fully implemented AI at scale.
Retail is more insulated from AI disruption than it was from e-commerce but the market becomes more polarized. A K-shaped consumer dynamic drives outperformance at the high and low ends, with mid-tier retail under pressure. Experiential, service-oriented formats - food and beverage, health and wellness, entertainment - continue to gain share.
Multifamily benefits indirectly through stronger job and income growth, with affordability constraints in the for-sale market reinforcing rental demand. Class A product in talent-dense markets is positioned to outperform.
Capital Markets: A Healthy Cycle Ahead
In the baseline, total unlevered returns move back into the high single digits over the next few years – healthy, sustainable, and consistent with long run CRE performance.
AI is broadening the investable universe, with data centers accounting for a growing share of institutional portfolios. Assets underwritten today - at higher yields, conservative assumptions, and disciplined leverage - have the potential to be among the best-performing investments of the next cycle.
"AI widens the range of outcomes for real estate more than it shifts the central path," Thorpe said. "Performance is increasingly going to be determined at the micro level, by the quality of the asset, the flexibility of the space, the depth of the local talent pool, and how well operators and investors adapt to a market where dispersion is the defining feature."
About the Study
AI Impact on Commercial Real Estate: The Next 10 Years uses econometric models and a scenario-based framework integrated into Cushman & Wakefield's House View forecasts. The analysis traces AI's impact through a chain of transmission — from foundational drivers (regulation, power infrastructure, data center development) through AI adoption and productivity, macroeconomic outcomes, occupier demand, and real estate market response. Regional reports covering the U.S., EMEA, and Asia Pacific are available at cushmanwakefield.com.
About Cushman & Wakefield
Cushman & Wakefield (NYSE:CWK) is a leading global commercial real estate services firm for occupiers and investors with approximately 53,000 employees in over 350 offices and nearly 60 countries. In 2025, the firm reported revenue of $10.3 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.
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Garrett Derderian
garrett.derderian@cushwake.com