Stocks of U.S. real estate services companies experienced a collective sharp decline on Wednesday, driven by concerns that their high-labor, high-fee business models could become victims of accelerating artificial intelligence (AI) adoption and potential industry disruption. By the market close, shares of CBRE Group (CBRE.US) and Jones Lang LaSalle (JLL.US) had each plunged more than 12%, while Cushman & Wakefield (CWK.US) fell nearly 14%. The single-day drops for CBRE and Cushman & Wakefield marked their largest since the market crash triggered by the COVID-19 pandemic in 2020. Keefe, Bruyette & Woods analyst Jade Rahmani noted in a report released Wednesday that investors are accelerating their exit from business models perceived as "high-fee, labor-intensive, and potentially susceptible to AI disruption." However, she cautioned that the current sell-off "may overstate the near-term impact of AI on complex deal-making businesses," adding that the long-term effects on the industry remain to be seen.

This wave of declines further pressures the commercial real estate sector, which has struggled to recover since the pandemic reshaped office demand and rising interest rates dampened transaction volumes. Although the AI boom has created structural opportunities in areas like data centers and premium office leasing, the market is reassessing whether advancements in AI for automating processes and streamlining transactions will exert sustained pressure on traditional intermediary and brokerage services. To navigate the industry downturn, companies such as CBRE and Jones Lang LaSalle have actively expanded their business scope in recent years, venturing into property management, asset valuation, and cross-sector investment sales covering hotels, warehouses, apartments, and life sciences laboratories, aiming to diversify away from the cyclical risks of pure brokerage.

Rahmani described the sell-off as part of the latest round of "AI panic trading." Over the past week, stocks of software firms, private credit providers, wealth managers, and insurance brokers have already seen rapid capital outflows, with real estate services stocks becoming the latest sector affected. Nevertheless, some institutions view the market reaction as excessive. Barclays analyst Brendan Lynch suggested that the magnitude of the declines appeared "overdone" given the absence of significant new negative catalysts on the day. He noted that part of the selling pressure stems from fears that AI will impact employment and commercial real estate demand, but these risks "did not emerge overnight and are not fundamentally different from the previous day."

The shift in market sentiment followed last week's release of a suite of tools by AI startup Anthropic aimed at automating tasks in legal services, financial research, and other fields. Despite this, several analysts warned that the current sharp sell-off may be more of an emotional reaction, exaggerating the actual risks. Jefferies analyst Joe Dickstein stated that the direct threat from AI to real estate leasing and capital markets operations remains limited. He emphasized that CBRE and its peers hold significant advantages in data scale and industry relationships, and their central role as intermediaries for major leases and large transactions is unlikely to be disrupted in the short term.