Artificial intelligence could be another blow to the office market | Urbanized – Daily Hive

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There could be more headwinds to the office real estate market due to the explosive growth in computing power through artificial intelligence (AI).

According to a new report by Oxford Economics, the office market is the most exposed property sector in the United States to the impact of generative AI by 2032. While the analysis only examined the US market, the Canadian market tends to generally align with the trends of its neighbour to the south.

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Generative AI will assist or automate office workplace tasks, replacing the level of office labour typically required. Workers in the information, professional, scientific, and technical services sectors are most at risk of being displaced, and such sectors are typically office-using.

More specifically, computer, mathematical, administrative support, and sales roles are also among the most exposed roles.

Generative AI could displace over 9% of the US workforce by 2032, which represents 9.3% fewer work hours required to produce the same level of output compared to today.

This could provide an added headwind to future office space demand unless office-using employment growth can increase enough to offset the losses due to AI and other factors.

The office property market is most exposed with a generative AI exposure score of 18.5%, followed by 11.5% for life sciences properties, 8% for manufacturing properties, 7% for retail properties, 6.9% for healthcare properties, 6.5% for leisure properties, and 5.5% for education properties.

Globally, the office market is already facing headwinds such as the enduring semi-remote work-at-home arrangements from the pandemic and working-age population declines. However, some office markets have been less impacted by semi-remote work, including select major Asian markets.

Although there could be commercial real estate and employment impacts, the use of generative AI is expected to increase the productivity of the overall US workforce by over 10% over the next decade.

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