US study: AI job replacement has actually increased demand for office space

In the United States, the world's largest AI market, about 4% of workers may be replaced by artificial intelligence, with about 40% of them concentrated in five states: California, Texas, New York, Florida, and Illinois. A new study by global real estate giant JLL points to a paradox changing the face of the American office market: the markets where the industries most exposed to job replacement due to AI are concentrated are also those that attract the strongest demand for real estate from AI companies.

The study's conclusions refute the common assumption that as jobs are replaced by AI, demand for office space will decrease. According to JLL, performance in the real estate market depends, among other things, on the composition of local employment sectors, the types of activities taking place in each property, and the quality of the buildings. The central variable, the study suggests, is each market's ability to adapt to change.

An analysis conducted as part of a collaboration between JLL, the MIT Sloan School of Management, and the MIT Center for Real Estate found that in leading urban markets in the United States, high exposure to employment change from AI coexists with a larger volume of personnel recruitment in the fields of AI and machine learning. San Francisco is a prominent example of this. The city is among the markets with the highest exposure to role replacement due to AI, but simultaneously records a trend of job creation around the technology.

Accordingly, since 2025, AI companies have been responsible for 29.7% of all office rentals in the city compared to 16.7% in Silicon Valley and 16.3% in New York. In San Francisco, demand for offices in the AI sector recorded an annual jump of 247% compared to 169% in the general technology sector, while in New York, demand in the AI sector jumped by 283% compared to 109% in the general technology sector. In Austin, Texas, ranked fourth in the rate of AI demand for offices, the figure stands at 7.1% with an annual increase of 23%.

According to JLL, the findings change the way risks should be assessed in the real estate market, where the central variable is not the extent of exposure to artificial intelligence, but the speed at which a city is able to transition workers to new roles and attract the companies and activities created around the technology. Thus, in the technology sector in the United States, even though total employment decreased by 1.5% in 2025-2026, office rental activity continues the recovery trend that began there back in 2025. According to property management company VTS, demand in the United States for offices for AI companies jumped in the past year by 85%.

"For years, an increase or decrease in the number of employees was considered an almost direct indicator of the amount of office space a company would need," explains Yaniv Lotringer, CEO of JLL Israel. "The study shows that this connection is no longer linear. A company can reduce back-office roles and simultaneously expand research, development, product, and cyber teams and concentrate them in a higher-quality property. Therefore, the question is not just how many employees will be in the company, but which employees, and in what type of property they are sitting."

Lotringer further says that exposure to AI is not necessarily a sign of weakness. "For property owners and investors, the question is whether the market and the property are capable of adapting to change. It is no longer enough to know who is renting the building. You need to understand what is happening inside it, which activities are more exposed to automation, and whether the property provides the quality, flexibility, and infrastructure that companies will need in the coming years. The demand for offices does not necessarily disappear, it changes address."