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Commercial real estate services stocks sank for a second day on Wall Street on Thursday as the sector became the latest to be swept up in a sell-off prompted by fears over AI disruption.
Shares in CBRE fell close to 14 per cent in lunchtime trading in addition to a 12 per cent slide on Wednesday, wiping billions of dollars off its market value.
Jones Lang LaSalle shed 12.6 per cent following a similar slide on Wednesday, while Cushman & Wakefield lost 11.7 per cent after a 14 per cent decline in the previous session.
The contagion spread to Europe on Thursday, where shares in Savills ended almost 7.5 per cent lower in London, while UK flexible workspace group IWG tumbled almost 9 per cent.
The slide came as the S&P 500 dropped 1.1 per cent as a sell-off in the technology sector reignited on Thursday, while the tech-heavy Nasdaq Composite lost 1.6 per cent.
The declines came after similar sell-offs for sectors regarded as potential losers from the rapid advances in artificial intelligence, with shares in wealth managers, software, data and analytics stocks all hit over the past week.
AI’s potential to replace a range of tasks in so-called knowledge sectors and lead to swaths of job cuts has also sparked concern among investors in property groups that demand for offices could fall.
In addition, investors are fearful that amid the advent of AI, companies will no longer require a human broker to help them secure office leases, for example, and will instead be able to use automated advice.
People are starting to think about the durability of these “middlemen” businesses over time, said Joe Dickstein, an analyst at Jefferies, who described the sell-off as “incredibly overdone”.
“These companies are providing networks of relationships and deep data,” he said. “At the end of the day, these are interpersonal transactions, they’re at the table negotiating. The idea that we’re each going to have our own AI broker agent negotiating with each other is a little ludicrous to me.”
The Wall Street sell-off came despite analysts’ positive outlook for the industry’s shares this year, with Jefferies in December citing the sector’s “outsourcing momentum, growth in digital infrastructure within services, and expectations for another strong year in capital markets”.
CBRE’s results on Thursday failed to stop the bleeding. It reported record quarterly revenue, up 12 per cent to $11.6bn in the three months to December 31, although net income fell almost 15 per cent to $416mn.
Chief executive Bob Sulentic said on an earnings call that AI would benefit the business over the longer term, adding that its transaction and investment work would be “most protected” from disruption.
“Clients engage CBRE to plan and execute complex transactions because of our creativity, strategic thinking, negotiating skills, deep base of market knowledge and broad relationships,” he said. “None of this seems likely to be replaced by AI in the foreseeable future.”
Some real estate companies are taking the opportunity to tout their AI prowess. Property portal Rightmove said it had expanded the AI options on its platform, after pledging in November to bump up investment in AI for customers, back-office operations and research and development.
Chief executive Johan Svanstrom said at the time that AI was “becoming absolutely central to how we run our business and plan for the future”.