A.I. Could Prove Worse for Office Occupancy Than Remote Work

Work from home — the movement that started during the Covid-19 pandemic and then continued when originally people thought it would die out — has been seen as an ongoing bane to the office market. Companies with dispersed workforces may not have as much need for maintaining office space as they once might have.

There’s also been the so-called flight to quality in companies moving into better digs and a greater ability for Class-A properties to remain in demand, leased up, and maintaining rents. And interest rates making refinancing a challenge. A complex situation.

Now add another wrinkle: artificial intelligence. The technology first appeared in the 1950s. Developing over a long time, it’s become mainstream in ways that have been almost invisible. Software for decades has implemented a range of implementations that range from complex aids for data analysis to things as common as spellcheck.

This latest wave of generative AI that can store statistical combinations of text or images and then shuffle them to present something that seems sentient is different. Beyond enormous hype about its capabilities, there is a sense that in combination with other types of AI, many jobs found in offices potentially could be at risk.

Manulife Financial Corp. spoke to this in an interview with Bloomberg. While the Toronto-based insurer discussed the office market in various geographic regions, Chief Financial Officer Colin Simpson “warned that advancements in artificial intelligence may erode white-collar employment, stifling any potential rebound in demand for desks.”

The existence of AI isn’t by itself a guarantee of replacing workers. At the same time, companies don’t necessarily develop expensive technologies with the assumption that they won’t replace people in certain types of jobs, which may include many that take place in an office.

The White House’s Council of Economic Advisors recently looked at how AI and jobs might interact. “Some workers typically benefit from technological change, either because the evolving technology provides new labor market opportunities for them or because it enhances their productivity in their current job,” they wrote. “Conversely, some are harmed, typically due to job displacement. Predicting the impact on a given occupation requires identifying whether it is exposed to AI via its particular mix of activities, and also whether, on net, AI complements or substitutes for human performance of those activities.”

“Labor-substitution is easiest and cheapest in situations where complexity and difficulty are low. Working with AI in a complementary fashion may be more effective in complicated and challenging jobs,” they added. The analysis suggested that 20% of workers are in high-AI exposure areas, with 10% also having low-performance requirements, making them most disposable.

And there is also the question of how many jobs that people assume are high-performance might be low-performance — and how many of those take place in offices.

The company Beautiful.ai, which makes office presentation tools, recently sponsored a survey of managers. Of the respondents, 41% said that they hope they can replace employees with cheaper AI tools and 40% said multiple employees could be replaced by AI with no lasting negative impact to the workers still left.

For all the gasping wonder at what programs can do, the ultimately results could leave office owners even more gasping for air than work from home does.