Two years in: The workforce changes reshaping office demand
The future of office demand? Less space for juniors, more for senior talent leveraging AI’s leap in capability.
Extraordinary AI capability gains are reshaping labour markets faster than most realise—with profound implications for which tenants will need more space, and which will need far less.
Executive Summary
Two years in, AI has leapfrogged in capability. Labour markets are shifting, with junior roles evaporating fastest. For CRE, this means some tenants will shrink, but others—those leveraging AI to expand—will grow, reshaping demand patterns.
Capability Development Phases
Two years ago I ran the first cohort of my #GenerativeAIforRealEstatePeople course. This week we’re starting the 12th.
I thought this would be a good time to review how the AI scene has changed over this period.
We’ve seen three phases of development:
Phase 1: Multimodality (late 2023 – mid 2024)
Focus: AI systems expand from text-only to unified models with images, voice, data, and search.
Nov 2023 – ChatGPT unified model (text, images, data, web search)
Nov 2023 – Arrival of Custom GPTs
Feb 2024 – Gemini expands to 1m token context window
May 2024 – ChatGPT 4o (advanced voice + vision)
June 2024 – Anthropic launches Claude Artifacts & Projects
Phase 2: Reasoning (mid 2024 – late 2024)
Focus: Models get better at structured thinking, coding, and sustained tasks.
Jun 2024 – Claude Code launched (dramatic leap in machine coding)
Sep 2024 – ChatGPT Projects launched
Oct 2024 – ChatGPT o1 (first “reasoning” model; advanced voice & search)
Nov 2024 – Google NotebookLM with audio overview
Nov 2024 – Lovable launched (“vibe coding” movement)
Dec 2024 – ChatGPT o3 (inference training + multi-pass consensus)
Dec 2024 – Gemini 2 & 2.5 Pro (“Thinking mode”, fully multimodal)
Dec 2024 – Deep Research arrives across models
Phase 3: Autonomy (2025 onwards)
Focus: Agents, orchestration, and early autonomous computing.
Jul 2025 – ChatGPT Agent launched (autonomous computing)
Aug 2025 – GPT-5 launched
Exponential Improvement Trajectory
Which means, in short, an enormous increase in the breadth and depth of capabilities.
When ChatGPT-5 launched recently the response was somewhat underwhelming. It was better, but not dramatically so, to the previous models.
However, if one compares the capabilities of GPT-5 with those of GPT-4, launched in March 2023, the difference is enormous.
It’s like the frog that’s been slowly brought to the boil without noticing.
Some have said AI progress is slowing down but, as David Shapiro has said ”AI is slowing down, insofar as most people are not smart enough to benefit from the gains from here on out!”
We have come a long way and have incredible power at our fingertips. All the time whilst, as Google announced last week, their energy cost of AI queries had dropped by 33X in just one year, and for any given unit of intelligence the ongoing trend of becoming 10X cheaper each year is holding steady.
Labour Market Impact Evidence
All of which is starting to have big consequences, even whilst it is still only circa 10% of ‘knowledge’ workers who use these tools every day as part of their workflows.
This week, three Stanford professors released a report, ‘Canaries in the Coalmine’, which examines early signs of how AI is reshaping the US labor market, especially for young and entry-level workers.
Key findings were:
- Young workers (22-25) in AI-exposed jobs have seen a 13% drop in employment since late 2022, even as older colleagues in the same roles maintain or increase employment.
- The decline is not due to industry-wide layoffs, but to firms quietly not backfilling entry-level positions as they become vacant, erasing the bottom rungs of traditional career ladders.
- AI-driven job reductions are concentrated in roles where AI automates codified or rule-based tasks ("book learning"); jobs where AI augments human skills (especially those reliant on experience or tacit knowledge) are not impacted similarly.
- Older and more experienced workers in the same occupations are not affected and may even see job growth, underscoring that this is age-specific displacement, not a general workforce reduction.
- Wages across age groups remain flat, indicating that firms are reducing headcount rather than cutting salaries—for now.
- Researchers controlled for industry and firm factors, showing that the phenomenon is linked specifically to AI-exposure rather than broader economic trends or unique company shocks.
Office Demand Implications
Meaning what for office demand?
Probably less people needing space for doing entry level work, and more space for more senior types capitalising on their ‘tacit’ knowledge.
Anecdotally one is hearing similar dynamics occurring across the professional services arena. The great intake of yearly graduates, populating the base of the pyramid, may be coming to an end?
Similarly, stories such as that recounted by Salesforce boss Mark Beniof last week, that he has sacked 4,000 out of 9,000 customer support staff, are moving from rarity to commonplace.
Now I am sceptical that this trend will last, and indeed my projection is that junior people will come to do well out of this new tech - see Issue #33 - but for now at least things aren’t looking good.
Either way, if younger people DO end up doing better than the research is suggesting right now, that might well be at the cost of more senior people. Same capability, but cheaper, has consequences.
For the office market, we’re going to need a lot of growth to support the market. The dynamic is 100% less people visiting, maybe more space per person for ‘collaboration’, and no mass return to 5 days a week. Without growth, this is a solid ceiling. If you don’t have the ‘right’ space, you’re in trouble.
All things
#SpaceasaService
Exploring how AI and technology are reshaping real estate and cities to serve the future of work, rest, and play.
Cohort 12 starts 5 September #GenerativeAIforRealEstatePeople
The only AI course built by CRE pros, for CRE pros—from leasing agents and asset managers to workplace strategists.
In 3 weeks you’ll:
- Break down 20+ live case studies across the built environment
- Get hands-on with ChatGPT, Claude, Gemini, Perplexity & Midjourney
- Plug in 20 real-estate prompt frameworks to speed leasing, underwriting, ops & placemaking
- Leave with a playbook to spot high-ROI use cases and drive adoption on your team
“A must-take for anyone serious about AI in real estate.” — Prof. Suleiman Alhadidi, Vanderbilt University
“Insightful and truly engaging.” - Satbir Bassra, Senior Product manager, British Land, UK
In Pursuit of Tacit Knowledge
A key question for younger people is how to gain tacit knowledge? I think this might happen in two ways:
- ‘Someone’ will aggregate corporate tacit knowledge and publish it. This will happen across industries, and will be incentivised by the high value of this knowledge. Maybe ‘old timers’ codifying all they’ve learnt and passing it on. Or maybe through some sort of AI driven automated research tool, that gamifies in some way the passing on of knowledge.
- Within corporates, Slack Channels, email, diaries, notetakers and the like will be able to codify all the tacit knowledge in this unstructured data. Hybrid working just makes this easier - as we increasingly work asynchronously, our ‘office’ becomes virtual and all our knowledge and information is contained inside this virtual ‘beast’. Getting to understand the actual workings of a company has never been easier. Tacit knowledge will become explicit just through the process of working.
And so either of these levels the playing field for younger people. And solves the problem of it being all very well getting rid of the cost of juniors but they’ll be no-one to enter the ranks of the seniors. Companies cutting down their intake lose the optionality that has historically given them.
‘Forecasting is hard - especially about the future’, said Nobel prize-winning Quantum physicist Niels Bohr.
But…. I’d wager we’re going to see a different dynamic emerge anyway. And this goes back to something we covered in #Issue4 and #Issue11 - https://www.flexos.work/trillion-dollar-hashtag
Strategic Imperatives
The future belongs to fast, agile, ultra-productive superteams and those designing their business ‘for a bigger pie’.
Incumbents planning their futures on doing what they’ve always done, just faster and cheaper, will be the death of the workforce. A mentality going nowhere and destroying all notions of a ‘social contract’.
Without new ways of doing, and aiming for growth, we’ll all be in terrible trouble.
So let’s not go there.
The lesson of the last two years of Generative AI is that it IS going to be increasingly easy to substitute machines for labour, and that many companies will be incentivised to do just that, ahead of any restructuring or redesigning of their businesses.
So, within CRE, we need to become very good at identifying these types of company, as they are definitely going to be needing less space. And frankly, are customers to avoid.
Focus on Two Things
Where we need to focus is on two things:
First, identifying those companies leaning in to the new technologies, coming up with new business models, and with aggressive growth targets.
And secondly, applying the same thinking to ourselves; as individuals, teams, divisions and companies. We need to be the ones ‘smart enough to benefit from the gains from here on out!’
In Preparation For Next Week
Next week, I am going to build on this hypothesis: that we are moving towards an operating model where we’ll execute complete job functions from detailed prompts—define inputs, methodology, outputs, and let the model deliver results. And once optimised, these prompts will be evolved into autonomous agents.
The human role will transform into three functions: workflow design, data curation, and strategic intervention at critical decision points.
On the course we dig deep into where Humans + Machine works best. Where can we achieve AI Human Synergy - doing together what neither could do on their own?
This is going to require new types of working. And a very different mindset.
But, from the work I’ve been doing over the last few weeks, and based on the speed of progress since our first cohort, I’m increasingly convinced that this is not the pipe dream I thought it was a year ago, but actually the framework for what is definitely going to happen.
We shall see. Soon!
OVER TO YOU
Are you feeling the change? Are you thinking of moving job, redesigning your business, looking for different markets?
Do you think we can go straight for ‘a bigger pie’, or will we have to go through the painful transition first?
Thank you for reading Trillion Dollar Hashtag. Here’s to rethinking the future of real estate together.
Best regards,
All things
#SpaceasaService
Exploring how AI and technology are reshaping real estate and cities to serve the future of work, rest, and play.