CBRE says Asia Pacific office demand to rise despite AI

CBRE forecasts that occupied office space in Asia Pacific will continue to grow despite the spread of artificial intelligence, with the study projecting 13% growth through 2030 under a moderate AI displacement scenario.

The report examines how AI may reshape office demand across the region rather than eliminate it. Roles facing meaningful displacement risk account for 1.8% of total employment in Asia Pacific, while a further 8% of workers are exposed to AI but may adapt through reskilling or moves into other occupations.

That would leave office demand below the firm's base-case forecast but still on an upward path. Under the base case, occupied office space is expected to rise by 18% between 2026 and 2030, compared with 13% under the moderate displacement scenario.

Tom Gaffney, Head of Leasing, Asia Pacific, for CBRE, said AI's main impact would be on the nature of work rather than the number of jobs.

"AI is often viewed through the lens of job displacement, but the bigger story is how it will reshape work rather than eliminate it," Gaffney said.

He said occupier sentiment was one reason demand is expected to hold up.

"As technology takes over routine tasks, collaborative and client-facing work will become even more valuable. Our latest research shows that around half of occupiers intend to expand their real estate footprint over the next three years, underscoring the resilience of office demand even as AI reshapes workplace roles and tempers employment growth in some sectors," Gaffney said.

Regional split

Drivers of office demand differ between developed and developing markets in Asia Pacific. In developed markets such as Australia, Hong Kong, Japan, Singapore and South Korea, occupiers are expected to add space after years of portfolio reductions and tighter space use during the pandemic.

In those markets, higher office attendance and a greater emphasis on employee experience are expected to support a 5% rise in occupied office space between 2026 and 2030 under the moderate AI displacement scenario.

In developing markets including Mainland China, India and Southeast Asia, office demand is being supported by structural economic shifts. These include the expansion of tertiary industries and migration towards institutional office buildings, which should support 19% growth in occupied office space through 2030 even with moderate AI disruption.

Supply pipeline

The research also argues that AI is unlikely to trigger a broad oversupply problem in the region's office markets. Developers have already delayed or cut back projects as construction and financing costs have risen and market uncertainty has increased.

As a result, the development pipeline is shrinking. Annual completions are forecast to fall to 3.2% of fourth-quarter 2027 stock in 2028, down from 5.3% in 2019 before the pandemic.

Ada Choi, Head of Research, Asia Pacific, for CBRE, said tighter future supply should help prevent a sharp imbalance.

"Even if AI moderates office demand growth, we do not foresee a major supply-demand imbalance emerging in Asia Pacific," Choi said.

"At the same time, a shrinking development pipeline is expected to help support market balance and relatively stable vacancy levels throughout the remainder of the decade," she said.

CBRE expects office market fundamentals across Asia Pacific to remain relatively stable under both scenarios. In its base case, vacancy is forecast to edge down from 16% in the second quarter of 2026 to 15% by 2030. Under the moderate AI displacement scenario, vacancy would be only three percentage points higher than that baseline forecast.

Prime divide

While the headline demand outlook remains positive, the report suggests AI may sharpen differences within office markets. Rather than materially reducing overall take-up, the technology is expected to influence where tenants want to be located.

Occupiers are likely to concentrate more demand in premium buildings that better support collaboration, innovation and technology-led working patterns. That could intensify the existing shift towards higher-quality offices and increase pressure on owners of secondary assets.

For landlords of lower-quality buildings, that points to a tougher leasing environment unless assets are upgraded or repositioned. Some owners may need to consider alternative uses for buildings that struggle to compete as occupier preferences shift.

The findings come as office markets across Asia Pacific continue to adjust to hybrid work patterns, changing tenant requirements and a more selective investment climate.