A lot has been written over the past few years about the impact of Artificial Intelligence (AI) on different segments of our economy. Most of the attention recently has been focused on driverless cars and vehicles as Google and others have taken the once far-fetched Jetsons prediction and brought it to the verge of reality. The fact is, AI is making major strides in many other areas and is probably a generation away from replacing many of today’s jobs and professions. This raises a very interesting (and frightening) question for real estate owners. What happens to our office buildings when the white-collar workforce starts to disappear?
If in fact we get to a point where most of today’s office jobs are lost and not replaced by an equal number of new, technology driven jobs, many landlords and lenders will be left out in the cold. And for better or for worse, that appears to be the direction in which we are headed. Everything we hear and see tells us that demand for office space is shrinking and that trend is only going to continue. If that’s true, there won’t be enough workers to fill all of our current office buildings and many will become vacant. The only question is, like in the game Hot Potato, who will get rid of the asset before it’s too late.