We wrote about our thoughts on AI 6 months ago, but at the fast pace things are moving, that feels like an eternity. In January 2026, Anthropic launched Claude Code / Cowork, an incredibly useful agentic AI tool for coding and general business analysis. For the first time since ChatGPT launched in late 2022, the market started to think, “wow, this AI stuff can actually replace knowledge economy work!” The SaaSpocalypse ensued, where $1 trillion in market value was erased from software and consulting firms in the weeks following Anthropic’s release. After digesting things ourselves, we thought this marked a good time to do some thinking on AI. Specifically, we try to answer the questions: how will this all play out? What will be the impact on real estate?
Omnichannel Intelligence
The example of e-commerce vs. brick & mortar retail serves as an analogy of how AI and human intelligence might co-exist in the future. Going back to the 2010s, e-commerce (e.g., Amazon) was gaining share rapidly as brick & mortar retail became increasingly obsolete. This decade culminated with a global pandemic that severely reduced retail foot traffic, with e-commerce taking even more share. Yet coming out of the pandemic, an interesting thing happened – the pendulum swung back toward brick & mortar retail. It turned out that combining the two into omnichannel retail was the best approach. Customers could order something online, pick it up at the store, return it to the store, or even go to the store and order an item to be shipped to their home later. It appears that e-commerce and brick & mortar retail have found a way to coexist in an optimal arrangement.
We think the same thing may happen with artificial and human intelligence. As of early 2026, there is a lot of prognosticating around the end of the knowledge economy as we know it. Some firms are laying off employees in droves. While AI is making headlines right now, we think that most organizations will settle on an “omnichannel” approach to intelligence. That is, deploy AI for some tasks or even entire roles, and humans for other roles. Enable humans paired AI tools to work on projects more efficiently and intelligently, as we are already seeing happen today. Trust and relationships are a big factor in the economy, and humans have an edge there for the foreseeable future. But for routine rules-based tasks, AI should carry the day. The bottom line is that each form of intelligence has its own strengths and weaknesses, and we think they can combine to create an optimal output for organizations.
Quick Recap of Career Risk
Last time, we wrote about the impact of AI on various roles in the real estate industry. We posited that roles involving rules-based tasks were most at risk of being disrupted, including financial modeling, underwriting, and assembling property decks. If you perform one of these types of roles, we would guess that you are seeing AI being incorporated into your workflow. On the other side of things, least likely to be disrupted are roles that center on human connection, like investor relations, or operationally-intensive and complex roles such as asset management or real estate development.
Allocating Capital in the Age of AI
Beyond career implications, AI also has meaningful consequences for where investors should deploy capital. We recently did some thinking on real estate through the lens of the AI economy and concluded that investors should mostly focus on the following: 1) apartments with exposure to diverse employment bases, 2) infill industrial buildings, and 3) grocery-anchored or necessity-based shopping centers. In terms of apartments, while we don’t know exactly the impact of AI on future employment, we believe it will be significant. However, as long as there are several employment drivers in a given submarket, we are comfortable that the resident base will be resilient. We think investors should focus on healthcare as an employment driver, since healthcare is less likely to be disrupted by AI in the near-term. We are more concerned about exposure to professional services, including technology, finance, insurance, law, and consulting.
We think that industrial has the potential to be both positively and negatively impacted by AI, since AI may bolster e-commerce activity while also cooling overall economic activity. For a pointed view on a cooling economy, please see this Citrini research substack post (or better yet, have AI summarize it for you). As it relates to risks around driverless cars and trucking, we think that infill industrial is well positioned for those risks. Even if cars and trucks are moving more goods along longer routes with fewer stops in between, we think that infill industrial will continue to be a critical node at the end of the supply chain. Additionally, infill industrial will remain relevant for companies producing goods that serve dense populations in the immediate metro area. Even if robots (and not humans) end up manufacturing those goods, the industrial space will still be needed to facilitate that process.
Finally, in terms of retail, there is a scenario where AI leads to significant layoffs and an overall reduction in disposable income. In this scenario, we favor retail with necessity-based tenants like grocers, drug stores, medical and personal services, and fast casual restaurants. Even if disposable incomes go down, people still need to eat, fill prescriptions, go to the dentist, and get a haircut. We think investors should focus on retail deals with a high percentage of these types of tenants in order to mitigate risk.
Proceed with Caution
Some areas that we think real estate investors should be more cautious on include high-end retail (concerns around future disposable income), business-focused hotels (there may be fewer consultants traveling for work in the future), Class A multifamily in tech hubs (layoffs may happen sooner in these markets), and office (a more efficient workforce doesn’t need as much space).
Data centers should do well in theory, with AI training and inference compute driving significant demand for data centers. However, concerns on data centers include the high valuation, future development constrained by access to power, water, and public backlash (driving up electricity prices), and the risk of obsolescence given fast-moving chip technology. We view data centers as more of an infrastructure play as opposed to traditional real estate. In this fast-changing market, we prefer to focus on the core real estate sectors.
The reason is that real estate is a long-duration asset class that is a bet that things will stay the same. If this happens, you can collect and raise rents during the hold period and eventually sell for a high terminal value to the next buyer. In a fast-changing world, we prefer to focus on areas of real estate that we think will change more slowly.
Closing Thoughts
AI may be the single biggest change or transformation that happens in all of our careers. Instead of letting the change come to you, we encourage you to take a proactive approach. That could include choosing a specific path within real estate, re-focusing on a certain property sector, or simply incorporating AI into your daily workflow. Whatever it may be, we encourage you to think through the implications of AI on your professional path. You can even use AI as a thought partner or a career coach. So if you haven’t already, sign up for an AI subscription and get started! We suspect that you will conclude it is well worth it. As always, we’ll be here to provide some “human” career guidance along the way!
Looking to learn more? Check out our various professional resources! Whether you have yet to break into the industry or are just starting out in a new role, we have everything you need. All you need to bring is your effort!
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