AI Scare Trade Hits Commercial Real Estate Stocks

Intermediate | February 20, 2026

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A New Market Fear: The AI Scare Trade Spreads From Software to Real Estate

Investors have a new worry in 2026: AI might disrupt entire business models, and the market is reacting fast. After a big sell-off in software shares, the fear spread into commercial real estate (CRE)—especially companies that make money from office demand and property deals. Reuters called this wave of selling an “AI scare trade,” where people sell first and ask questions later. (Reuters)

What’s Getting Hit: Property Services and CRE-Linked Stocks

The drop wasn’t small. The Guardian reported that on Wall Street, property service firms fell for a second day in a row: CBRE shares plunged 12.5%, Jones Lang LaSalle (JLL) lost nearly 11%, and Cushman & Wakefield fell 9.1%—after even sharper declines the day before. In Europe, the sell-off hit companies like Savills (down 7.5%) and International Workplace Group (Regus) (down 9%). (The Guardian)

Why the Office Market Is Nervous

Here’s the logic investors are using: if AI automates more office work, companies might hire fewer people—or allow more remote work—which could mean less need for office space. The Epoch Times highlighted a big stress signal in the background: the U.S. office vacancy rate hit 20.5% in the fourth quarter of 2025, described as a historic high. When vacancies are already that high, markets get extra jumpy about anything that could weaken demand further. (The Epoch Times)

“Wait—Is This Overdone?” Some Analysts Say Yes

Not everyone thinks the panic is rational. The Guardian quoted analysts saying this sell-off may overstate AI’s immediate risk because complex deal-making still needs real people—negotiation, relationships, and local market knowledge. In fact, the same Guardian piece noted that CBRE reported $11.6 billion in fourth-quarter revenue (up 12%) and said 2025 revenue rose 13% to $40.6 billion, while also forecasting 2026 profit above estimates—partly helped by leasing and facilities management as data centres expand. (The Guardian)

The Real Story: Uncertainty + Fast Money

So what’s really happening? The AI scare trade is fueled by uncertainty, and markets hate uncertainty. When investors can’t easily measure risk, they often dump anything that looks vulnerable—even if the long-term impact is still unclear. Reuters captured the mood with a quote: investors were in “sell first, think later” mode, trying to guess “who is next.” That fear can move prices quickly, especially in sectors already under pressure like offices. (Reuters)

Useful English for Work: Talk About Risk Without Sounding Dramatic

This story is great practice for business English because it teaches calm, professional ways to talk about fear: “market sentiment,” “re-evaluation,” “exposure,” “vulnerability,” and “overreaction.” You can also practice giving a balanced opinion: “AI is a long-term risk, but today’s sell-off may be an overreaction.”

Vocabulary

disruption (noun) — a big change that interrupts how an industry works.
Example: Investors fear AI disruption could change office demand.
commercial real estate (CRE) (noun) — business properties like offices, malls, and warehouses.
Example: CRE stocks fell as the market reassessed risk.
vacancy rate (noun) — the percentage of empty space available for rent.
Example: The office vacancy rate hit 20.5% in late 2025.
sell-off (noun) — a rapid wave of selling in the market.
Example: The sector saw a sharp sell-off in two days.
vulnerable (adjective) — likely to be harmed or affected.
Example: Investors targeted firms viewed as vulnerable to automation.
overstate (verb) — to describe something as bigger than it really is.
Example: Analysts said the market may overstate AI’s short-term impact.
deal-making (noun) — negotiating and closing business agreements.
Example: Complex deal-making still relies on human relationships.
exposure (noun) — the level of risk you have to something.
Example: Investors reduced exposure to fee-based service businesses.
sentiment (noun) — the general feeling of investors.
Example: Negative sentiment spread from software to real estate.
overreaction (noun) — a response that is too strong.
Example: Some traders think the drop was an overreaction.

Discussion Questions (About the Article)

What is the “AI scare trade,” and why did it spread beyond software?
Which companies were hit the hardest, and what were the percentage drops?
Why does high office vacancy make investors more sensitive to bad news?
What evidence suggests the sell-off may be overdone?
What would you watch next to see if the fear is real or just panic?

Discussion Questions (About the Topic)

Do you think AI will reduce office demand long term? Why or why not?
Which jobs do you think AI will change first—office jobs or hands-on jobs?
How should companies balance remote work with in-person collaboration?
Should investors react quickly to new tech risks, or wait for real data?
If you worked in real estate, how would you “future-proof” your career?

Related Idiom

“Jump the gun” — act too early, before you have enough information.

Example: Some investors may be jumping the gun by selling CRE stocks before AI’s real impact is clear.

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This article was inspired by

The Epoch Times (Updated Feb. 17, 2026): “AI Disruption Fears Rattle Commercial Real Estate Stocks” (The Epoch Times)
Reuters (Feb. 13, 2026): “From software to real estate, U.S. sectors under the grip of AI scare trade” (Reuters)
The Guardian (Feb. 12, 2026): “Share values of property services firms tumble over fears of AI disruption” (The Guardian)