PODCAST: AI sparks office space race, not collapse

While reading the headlines might lead one to conclude that AI is the death knell for office buildings, JLL research shows the reality is more nuanced. In fact, in some markets, it’s entirely the opposite.

Rather than retreating from physical space, tech companies building AI infrastructure are expanding aggressively. In Sydney alone, the technology sector's office footprint has nearly doubled over the past five years to over 400,000 square metres. In markets like San Francisco, AI firms now account for nearly 30% of all office leasing.

But there’s a paradox: while AI creators gobble up premium space, traditional businesses are using the same technology to automate back-office roles and potentially ‘do more with less’. So, what's the net impact on central business districts?

"I think the public narrative really conflates how AI is going to impact labour markets versus its real estate impact," says Ronak Bhimjiani, real estate economist for Australia and New Zealand at JLL. "They're not actually tracking on the same trajectory."

In this episode of the JLL Perspectives podcast, host Rebecca Kent explores this tension with three experts navigating AI's real-world impact on commercial property. The panel examines which industries and job roles are most exposed to automation, what the ‘co-pilot economy’ means for workplace design, and why investors need to think in scenarios rather than single forecasts.

The conversation also turns to what this divergence means for property owners. Research from Yuehan Wang, who leads JLL's Global Technology Research Programme, identifies a widening gap between premium ‘experience quotient’ (EQ) assets that are thriving, and older B-grade buildings falling into a ‘disruption zone’.

With supply pipelines historically low across major Australian markets, the implications for vacancy rates, rents, and capital values are profound.

"All landlords are concerned about this," admits James Montague, head of Office Leasing in Australia. "But what we take comfort in is this is an evolution of workplace, no different to previous recalibrations. The net effect is a growth factor rather than a detractor."

The discussion also tackles unexpected questions – from the shocking cost of AI tokens to whether deepfake technology will make face-to-face meetings the only trusted form of communication by 2030.

Listen to the full episode to hear how landlords, occupiers, and investors should be positioning themselves for an AI-driven future that's already reshaping our cities.

Featuring Yuehan Wang, global technology research programme Lead; Ronak Bhimjiani, Real Estate Economist for Australia and New Zealand; and James Montague, Head of Office Leasing in Australia.