The "next AI victim" has appeared, with real estate service stocks being sold off, marking the largest single-day decline since the pandemic.

Real estate service companies’ stock prices plummeted sharply as investors reassessed their vulnerability to artificial intelligence applications and tools.

On Wednesday, CBRE Group and Jones Lang LaSalle’s stock prices dropped 12%, while Cushman & Wakefield tumbled 14%, marking their largest single-day declines since the market sell-off during the COVID-19 pandemic in 2020.

Wall Street Journal previously reported that software companies, private credit firms, wealth management institutions, and insurance brokers have all been impacted and declined amid concerns over AI, representing another industry sector caught in what is called an “AI panic trading” within just over a week.

Keefe, Bruyette & Woods analyst Jade Rahmani stated that investors are pulling out of high-fee, labor-intensive business models because these are viewed as potentially vulnerable to disruption driven by AI.

Analysts also pointed out that this sell-off may have exaggerated the immediate risks AI poses to complex transaction businesses, with some of the selling pressure stemming from worries that AI will disrupt the job market and commercial real estate demand.

Commercial Real Estate Industry Faces Additional Challenges

This sell-off has brought new shocks to the commercial real estate sector.

The industry has been struggling to recover since the pandemic, with office demand drastically changing and high interest rates severely suppressing transaction volumes.

Although the AI boom has driven growth in certain segments, especially data centers and high-end office leasing, investors are weighing whether AI advancements will ultimately pressure some businesses through automation of tasks and streamlining of transaction processes.

Companies like CBRE and Jones Lang LaSalle have been attempting to buffer the market downturn by expanding their services into property management, valuation, and investment sales, covering a range of industries from hotels, warehouses, and apartments to life sciences laboratories.

Market Reaction May Be Overdone

Barclays analyst Brendan Lynch said that, considering the limited news flow on the day, the stock price decline appears “excessive.”

He pointed out that part of the selling pressure stems from concerns that AI will disrupt employment markets and demand in commercial real estate. Lynch stated:

These are potential risks, but nothing has changed compared to yesterday.

This wave of panic intensified after AI startup Anthropic released tools aimed at automating tasks across legal services, financial research, and other fields last week.

Meanwhile, analysts and investors warn that some of the sharp sell-offs reflect knee-jerk reactions that may overestimate the actual risks. Jefferies analyst Joe Dickstein said:

The threat of AI to leasing and capital markets is limited. CBRE and its peers benefit from significant scale advantages, including data and industry relationships. Their positions as major leasing and transaction intermediaries are unlikely to change.

Although analysts believe the market’s concern over immediate AI risks may be exaggerated, Rahmani also acknowledged that the long-term impact of AI remains in a “wait-and-see” state.

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