As artificial intelligence continues to reshape the workplace, one assumption has become increasingly common: if AI reduces certain jobs, companies will naturally need less office space.
New research from JLL suggests the reality is far more nuanced.
Rather than creating a uniform decline in office demand, AI is expected to widen the divide between markets, industries, business functions, and individual buildings. The impact on commercial real estate will depend not simply on how many jobs are created or displaced, but also on where those jobs are located, what functions employees perform, and what type of space companies need.
AI Is Creating Divergence, Not Simply Decline
JLL identifies three forces shaping AI’s impact on employment: role augmentation, selective job displacement, and the creation of new jobs.
These forces will play out differently across industries and markets. Some companies may automate administrative or back-office functions and reduce headcount, while others may use AI to improve productivity without significantly reducing their workforce. AI-focused companies and industries may also create entirely new positions and expand.
That means fewer employees in one part of the economy won’t necessarily translate directly into lower overall office demand.
Office Quality Could Matter Even More
One of the biggest implications for commercial real estate is the continued divide between high-quality office properties and older, less competitive buildings.
JLL notes that the slowdown in new office construction, combined with aging existing inventory, has created shortages of high-quality space in certain markets. Companies competing for talent may continue prioritizing modern buildings with strong amenities, technology infrastructure, flexibility, and desirable locations.
This creates a market where demand can remain strong for premium properties even while less competitive buildings face greater pressure.
The trend is already visible in the U.S. office market. JLL reported that office leasing activity reached a new post-pandemic high in the second quarter of 2026, while technology companies, including AI-driven organizations, led overall leasing volume.
Different Business Functions May Require Different Space
AI’s impact can also vary within the same company.
Back-office and administrative functions may experience greater exposure to automation, potentially reducing the need for certain traditional office footprints. Meanwhile, headquarters, client-facing teams, leadership, research, technology, and other high-value functions may continue to support demand for premium workplaces.
For owners and investors, understanding a tenant’s business is therefore becoming increasingly important. Two buildings occupied by companies in the same industry could face very different outlooks depending on the functions housed inside them.
The future of office demand cannot be measured by job numbers alone.
Investors, owners, and occupiers will increasingly need to consider the combination of workforce trends, tenant composition, building quality, available supply, location, and broader economic conditions.
AI may reduce demand in some segments while strengthening or reshaping it in others. The result is likely to be a more segmented office market-one where the right building, location, infrastructure, and tenant mix become even more important.
For commercial real estate owners and investors, the question may no longer simply be, “Will AI reduce office demand?”
A more useful question is: Which offices will businesses continue to choose as AI changes the way they work?
