Words out, “CEOs say it loudly: AI will wipe out many jobs.” (WSJ 7/3/2025).
Chief executives are no longer dodging the question of whether AI takes jobs. Now they are out in the open predicting how deep these cuts will go.
Ford Motor Chief Executive Jim Farley recently said, “Artificial intelligence is going to replace literally half of our white-collar workers in the U.S.”
Companies as diverse as Ford, JP Morgan Chase, and Amazon.com are warning of significant job cuts in the near future.
Microsoft just announced its laying off another 9,000 workers on top of the 6,000 already let go.
These aren’t assembly line workers. They are predominantly white-collar workers with engineering degrees: people who thought their technical expertise insulted them from the unemployment line. No more.
Before anyone else in Delaware Statutory Trusts specifically and commercial real estate generally, we warned investors that like the industrial revolution, AI would have a “once in a lifetime” impact on employment, hence real estate demand.
Just as the industrial revolution left craftsmen and piece workers behind, AI is going to leave a lot of white-collar workers in the dust too.
This seismic shift in employment, better yet unemployment may have a ripple out or knock-on effect with regard to commercial real estate.
Office and many of the retail spaces dependent on it are out. Office was first hollowed out by the pandemic and remote work. Just when you thought it was safe to go back into the water, along comes AI.
The nascent office recovery investors were hoping for was back-footed with no end in sight. This obviously has a depressing effect on surrounding retail business.
There is little doubt we have too much bricks and mortar retail for the digital age. With the exception of service businesses that are “Amazon proof,” retail continues bleeding out to ecommerce.
Like office, it too is being sucker punched by AI.
Prudent investors will consider giving these asset types a wide berth.
However, when selecting properties with a future, it’s not just a question of what but also where.
Cities exist to facilitate commerce. Wealth created thereby flows into the surrounding area expressing itself in better cultural amenities, attracting more residents.
If the office towers anchoring these metro areas are emptying out doesn’t that argue for less growth and the appreciation potential?
As the population ages, it is only natural for people to leave the bright lights of the city for the suburbs and exurbs. Priorities shift from the single life to raising a family.
We anticipated this a decade ago: the pandemic hastened it, we believe AI reinforces it.
Your DST portfolio should take into account these changes. Habitational assets may need to be prioritized over the workplace. This may be particularly true of property types like senior living where demand is driven demographically. AI and robots don’t age, we do.
Where you own is generally as important as what you own. Many urban markets are already hollowed out, mere shells of what they were pre-pandemic.
Migration between states will continue. Markets like Chicago, New York, San Francisco and Portland may continue to see domestic migration out. People and businesses may continue to flee cities and states with sky high taxes. Whereas the areas surrounding Charlotte, Nashville and Phoenix could continue to be a magnet to those leaving the east and west coasts.
Investing well for the future entails detailed analysis of those seismic changes affecting both our work and life.
