Why Brokerages Are 'Seriously Under Threat' From AI
Bob Sulentic had just delivered the kind of earnings report that should have sent his company’s stock soaring.
As CEO of CBRE, the world’s largest commercial real estate brokerage, Sulentic informed investors last week that its recovery was accelerating after two punishing years of rising interest rates and frozen dealmaking.
Revenue had risen 13% to $41B in 2025 as deal activity revved up. Global leasing revenue climbed 14%, and property sales revenue increased 19%, the company said.
Yet as Sulentic spoke on Thursday’s earnings call, CBRE’s stock was plunging.
Wall Street erased nearly $12B from the company’s market value between Wednesday and Thursday, and its shares fell more than 20%.
Caught up in what analysts have dubbed the “AI scare trade,” investors have abruptly fled companies whose business models hinge on human expertise and information advantages, the very qualities that have defined real estate brokerages for decades.
CBRE was far from alone. Over 72 hours, investors swarmed to dump stocks across the major brokerages, wiping out tens of billions of dollars in market value in the steepest sell-off of real estate stocks since the 2008 financial crisis.
Sulentic defended the company’s model and pushed back on the notion that artificial intelligence posed an existential peril, arguing that his brokerage remained rooted in relationships and judgment that could not easily be automated.
"We've become quite confident that business really is driven by the strategic creative thinking that our brokers do. And we think that's going to continue to be the case,” Sulentic said on the call. “And we haven't seen any evidence to the contrary."
Brokerages say they are leaning into AI, not as a replacement but as an asset for their people.
Analysts also questioned the extent of the sell-off, and prices have started to edge back up.
But the market is sending a message, and brokerage firms’ long-term economics may indeed be in peril.
“In my mind, this is a realization that their business model is seriously under threat through AI,” said Chris de Gruben, senior director for artificial intelligence in property and private equity at consulting firm Artefact.
“The clients are now saying, ‘Well, you're using AI, so why am I paying your extortionate fees? Clearly, it takes you far less time to do things, and now I want to pay you far less,’” he added.
The Trigger
Hessam Nadji, CEO of Marcus & Millichap, told Bisnow his initial reaction to the stock rout was confusion.
“I had to do some research to find out what had caused it,” said Nadji, whose firm’s shares fell just shy of 10% on Wednesday and Thursday. “When I realized it was tied to this notion of AI making brokerage obsolete, my immediate thought was that it was clearly an overreaction.”
The sell-off did not start in real estate. It started upstream, in the knowledge economy itself.
In the weeks leading up to CBRE’s earnings call, investors had begun pulling money from software companies and advisory firms whose profits depended on white-collar expertise. The shift accelerated after reports that Anthropic’s latest AI models could perform complex research, financial analysis and coding tasks at near-human levels, raising new questions about how much high-margin knowledge work could ultimately be automated.
Insurance brokers, wealth managers and even trucking logistics firms followed, as one by one, industries built on information and relationships came under pressure.
Commercial real estate brokerage was simply next.
“There wasn’t one specific event,” said Alexander Goldfarb, senior managing director and senior REIT analyst at Piper Sandler. “It’s more like a contagion and AI is the flu. It’s just moving through the market, and investors are trying to figure out what it means for business models that rely on people.”
That anxiety crystallized in a research note from Keefe, Bruyette & Woods analyst Jade Rahmani, who wrote Wednesday that commercial real estate services firms operate “high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption.”
The timing was striking because it came amid improving fundamentals. CRE investment activity is expected to increase by 16% this year, nearly matching pre-pandemic levels, according to CBRE, while leasing and capital markets activity had begun recovering across the industry.
Even Rahmani saw the markets’ reaction as overblown, writing Thursday that “the magnitude of the decline appears disproportionate to near-term earnings risk.”
But concern is growing that what felt untouchable — the expertise and specialized judgment of humans — may be fallible in the new world of AI.
Fees Under Pressure: The Impact Of AI On Brokerage
Anthony Slumbers, a real estate technology consultant, said the market reaction reflected growing recognition that changes brought about by AI are beginning to move from theory into operational reality.
“It’s the canary in the coal mine,” Slumbers said. “A red flag that shows you that, 100%, your business model needs to be edited, even if not completely changed. These companies are either in a really good position or a really bad position, depending on how they manage that.”
Analysts and investors expect the pressure to emerge unevenly. Property and facilities management may face earlier margin compression as many of those functions involve repeatable tasks that can be automated, said Taylor Wescoatt, a general partner at proptech venture firm Concrete VC.
Wescoatt said firms like JLL are more likely to harness AI and benefit from rather than be a victim of it.
But the risk is large. The property and facilities management division contributed $6.3B of CBRE’s $11.3B fourth-quarter revenue, the biggest share among all its service lines. The segment made CBRE $332M in profit last quarter. JLL has a similar mix, while property and facilities management makes up a smaller proportion of Cushman & Wakefield and Newmark’s revenue.
Advisory services made CBRE a profit of $709M from revenue of $2.9B — transactions are a higher-margin business.
Sulentic said CBRE’s focus on large transactions buffers it against disruption in this lucrative space, but that could cut the other way.
Kyle Matthews, CEO of private brokerage Matthews CRE, wrote on X that institutional real estate players have access to the most advanced AI to run their own searches, and the possible buyers at that level are limited and easy to find online, down to exactly what property types and returns they target — perfect fodder for an AI search rather than a broker requirement.
He said he sees more security for brokers in the small property space, as that buyer pool is “massive, unpredictable, often hard to get a hold of, and generally doesn't have a formulaic approach to purchasing real estate.”
Other areas ripe for disruption include research — Sulentic said on CBRE’s earnings call it can slash the cost of its research work 25% this year by using AI — strategy and valuation, Artefact’s de Gruben said. Armies of junior analysts and marketing teams were once required to assemble pitch decks, underwrite deals and track market activity, but that work can now be done faster and with fewer people.
There has been one early sign about AI’s possible impact on real estate services companies.
CoStar, one of commercial real estate’s dominant data providers, has reportedly already reduced its workforce by roughly 500 roles through AI-driven efficiencies and is preparing to introduce new AI-powered search tools across its platforms, according to a January research note from William Blair following meetings with company executives.
The analysts said those moves had intensified concerns about “AI disintermediation,” or the possibility that automation could reduce reliance on traditional brokers. But they said firms built on proprietary data and subscription revenue, like CoStar, may prove more resilient than those whose economics depend primarily on humans and transactional services.
Across American industries, AI was named as the reason for more than 50,000 layoffs last year, according to Challenger, Gray & Christmas.
Brokerages are pushing back on the notion they will employ fewer people in the world of AI.
“There will be fewer analysts and marketing professionals and graphic artists … they have to reinvent themselves,” Marcus & Millichap’s Nadji said. “Our message internally to all of our staff is we're not interested in just eliminating jobs … We're interested in helping folks evolve their careers, grow with the company. So it's not just a matter of mass job reductions. It's a matter of evolving your talent pool to a higher and better application.”
Real estate firms will remain important because they offer trust, verification and liability, de Gruben said. Investors want someone with professional liability insurance to sue if an appraisal is wildly inaccurate or to shout at if a strategy proves misconceived.
And no matter how smart AI gets, it lacks instinct and wisdom built from experience.
“You’ve done the due diligence on this £100M deal, and it's all looking good,” Slumbers said. “Then the senior partner says to you, ‘Don't do it. I’ve been around a long time, there's something not right.’ That's hugely valuable.”
Real estate is an emotional sector that requires reading people as much as processing data. Knowing if the CEO is a work-from-home evangelist or thinks it’s nonsense helps a human shape leasing strategy.
Global brokerages have valuable proprietary data, and the relationships that senior industry figures have are lucrative and hard to replicate.
“We don't get our brokerage leads online somewhere,” Sulentic said. “We get our brokerage leads because of deep knowledge about the occupiers and investors in the marketplace that we serve.”
The proportion of the hundreds of thousands of people employed by the big brokerage firms who truly fit that description of having deep relationships and market knowledge is a key question for these companies moving forward.
“It's not going to happen overnight, but in the next five to 10 years, you can replace probably two-thirds of the people in those firms with AI agents of some sort,” de Gruben said. “And the closer we get to agentic AI, that switch becomes easier, and the more pressure there is from the market to do so.”
Even if brokerages do reduce their staff or start to take in less income per deal, the rise of AI can still be beneficial overall for the industry, Matthews said.
“While there is no doubt AI will disrupt all facets of CRE, including private client, my personal belief is like all technological innovations it will likely reduce fees, but massively increase capital flows, leading to a greater pie,” he wrote.
Executives: Wall Street Is Moving Faster Than Reality
Nadji said the firm’s brokerage pipelines, client demand and capital markets activity are stable, pointing to earnings released Friday showing nearly 9,000 transactions totaling more than $50B last year and the firm’s largest workforce expansion in seven years.
“AI is everything, everywhere at all times,” he said. “It is absolutely here to stay, [and] I think it's going to revolutionize many aspects of the business. But I also think people are overlooking the fact that, today, when you try to apply AI to a financial model or a property overview or a marketing package, it's full of errors.”
Jay Hennick, global chairman and CEO of Colliers, echoed the view that the stock sell-off was misplaced.
“We are not seeing any negative impact on client behavior, transaction pipelines, or hiring,” Hennick said in a statement. “Demand for trusted advice, speed and insight remains strong. Clients are increasingly focused on making better, faster decisions in a complex environment, and that is exactly where AI-enabled analytics enhance our value proposition.”
Colliers’ earnings release last week underscored that point. The firm reported 2025 revenue of $5.6B, up 15% year-over-year, and that adjusted earnings before interest, taxes, depreciation and amortization increased 14% to $732.5M.
Hennick also said Colliers’ revenue has doubled over the past five years.
Brokerages have spent years investing heavily in AI tools designed to automate research, improve underwriting and enhance broker productivity. CBRE, JLL, Cushman & Wakefield and others have already developed proprietary platforms to analyze markets, generate reports and streamline transactions. Marcus & Millichap has spent years embedding AI across its technology platform to improve buyer-seller matching and accelerate financial analysis.
“It's really not constructive to paint the entire picture or concept with a broad brush, with a headline conclusion that brokers are going to be unnecessary,” Nadji said.
CORRECTION, FEB. 17, 10:54 A.M. ET: An earlier version of this story incorrectly described Colliers' growth over the last five years as by headcount rather than revenue.
