Artificial Intelligence: Real Estate Revolution or Evolution?

89%

C-suite leaders believe AI can help solve major CRE challenges

Future of Work Survey, JLL Research, 2025

700+

companies providing AI-powered Real Estate Tech solutions by end of 2024

JLL Research

2.04M sqm

Real estate footprint of AI companies in the US as of May 2025

JLL Research

First, it’s important to clarify the scope of discussion by differentiating the definitions of definitions of AI, generative AI, and agentic AI. AI, in a broad sense, uses algorithms to perform tasks that require the ability to learn from experience, understand complex concepts, recognize patterns, interpret the nuances of natural language and independently make decisions.

Generative AI is a subset of artificial intelligence that focuses on what its name implies – generating new content, designs or solutions. It employs advanced algorithms to create outputs, including synthetic data, images, text and music.

Agentic AI is believed to be the next phase of AI capabilities. It refers to systems that are not only capable of generating outputs but can also autonomously pursue goals, make contextual decisions, and take actions over time without continuous human prompting. These agents can plan, execute, and adapt tasks based on evolving objectives and feedback from their environment—bringing AI closer to a form of digital autonomy.

In this article, we will focus on AI in a broader context and discuss its impact on real estate, while specifically emphasizing the role of generative AI and agentic AI where applicable.

With AI, we anticipate a similar five-fold impact in the long run. While it remains to be seen how AI will be applied to specific sectors like healthcare and how much this growth will generate space demand, some influences are already emerging.

1. Geolocation: AI companies and investments have been observed to cluster around established tech markets. Going forward, growth is likely to be concentrated in locations where AI talent is available, namely tech hubs, innovation centers and universities.

2. Altered demand among assets: AI development calls for more and better data centers, energy grids and connectivity infrastructure.

3. New asset and product types: the birth of the ‘real intelligent building’ is imminent. AI-compliant infrastructure will become a default just as internet connections are a default feature of current buildings. AI will also help deliver net-zero buildings with high sustainability performance.

4. Revenue and investment: AI-powered underwriting and processes will enable faster transactions and more efficient understanding of properties and markets, catalyzing investments at a global scale. AI-compliant infrastructure and the ability to plug in multiple systems could also enable the expansion of ‘space as a service’ models and new revenue streams for landlords and developers.

5. Design and space function: AI will allow for experience-driven design and highly customizable environmental settings.

Read more about this topic in JLL’s Future Vision series - Get set for the 5th Industrial Revolution Real estate strategies for an AI-powered world

Existing AI companies prefer specific locations. In the U.S., for example, 42% of AI companies are concentrated in the San Francisco Bay Area, followed by Boston, Seattle and New York. AI startup growth is expected to continue to center around these major tech hubs in the near future.
 

U.S. sector distribution of AI company occupied

AI in PropTech will continue to grow. JLL research shows that as of end of 2024, among 7,000 global PropTech companies, about 10% (700 companies) are currently providing AI-powered solutions, including both AI native products and AI-augmented products. Venture capital (VC) is the main driving force backing the development of AI products. Among all AI-powered PropTech companies, around 62% are VC-backed. About 20% of companies are in the very early incubator, angel or seed stage; 25% are at early-stage VC rounds; and 15% are at late-stage VC rounds. Overall, this ecosystem is young and energetic, with most (83%) generating revenues or making profits, signaling long-term potential for the market. 

Read more about AI in PropTech in JLL Spark Featured Research: Where AI demand is creating investment opportunity

Act Now: Harnessing AI strategically and responsibly
 

There are still considerable uncertainties about the future impact of AI, the full range of its rapidly expanding capabilities and how these capabilities will be assimilated into specific industry sectors. It is crucial for real estate investors, developers and corporate occupiers to stay informed and strategic, considering how to leverage the power of AI to support your business objectives and how to do it in a responsible and ethical way.

As the regulatory landscape for AI evolves to keep pace with its growth, businesses must be vigilant about three types of emerging regulations:

• Market standards and protocols concerning data quality, IP rights, privacy and data security.

• Regulations to mitigate societal risks, such as measures to protect the labor market from shock or safety standards for autonomous vehicles.

• Environmental legislation, notably that aimed at mitigating carbon emissions from the growing digital economy.

Organizations will need to reflect on a number of key questions as they consider the right path forward: What does the growth in AI mean for your investment and location strategies across existing (or emerging) asset classes? What existing or future applications of AI do you need to be prepared for and pilot now? What are the potential business and societal risks?

Understanding how artificial intelligence will impact your business and creating a test and implementation strategy will be key to mitigating risk and harnessing the potential for growth.

Explore more of JLL's latest insights on World Economic Forum themes at our dedicated Davos page.