FIRST DRAFT LIVE: AI Supercycle Or Bubble? Oxford Economics' Michael Pearce On The Real Concern For Data Centers
Bisnow’s First Draft Live is a weekly series featuring live conversations about the critical stories impacting CRE right now — from market volatility and economic uncertainty to the growing influence of artificial intelligence. First Draft Live is a companion to The First Draft, Bisnow’s daily, flagship CRE newsletter. Register here to get The First Draft in your inbox. Subscribe to First Draft Live on Apple and Spotify, or scroll down to view in your browser.
The explosive demand for artificial intelligence tools is reshaping every industry, and commercial real estate is no exception. Data centers are projected to require $6.7T worldwide by 2030 to keep pace with the demand for compute power for AI, according to McKinsey & Co. research.
Meanwhile, Bain warned that AI firms face an $800B revenue hole by 2030, while Oxford Economics said investment is masking weakness elsewhere and may leave stranded assets if adoption disappoints. For CRE, the risk is clear: Today’s opportunity could become tomorrow’s overbuild.
Michael Pearce, deputy chief U.S. economist at Oxford Economics, said he doesn't see that on the near horizon.
Speaking to Bisnow Editor-in-Chief Mark Bonner on First Draft Live, Pearce said that while there is still a huge latent pool of demand for AI services and products, supply issues, power availability, power prices and local opposition could cause problems getting enough supply up.
He added that the biggest risk for CRE will come if people “put all their eggs in this one basket” and it leads to a collapse in prices and stranded assets. However, while people may be focused on the negatives of AI now, history has shown that large technological changes tend to boost the economy overall, Pearce said.
“You look back at every wave of technology and the result is an economy that’s a lot more productive, a lot larger,” he said.
Watch the full conversation below:
