1. AI AND COMMERCIAL REAL ESTATE
• A recent article by MSCI Real Capital Analytics suggests that despite the growing concern about AI’s
potential impact on commercial real estate, a balanced view should be taken that considers both the
economic risks of AI and its potential positive impact on productivity.
• The authors argue that AI could advance economic productivity, leading to higher incomes and increased
CRE demand over the long run. Data from MSCI RCA shows that, generally, as a country’s economic
output per worker (a standard measure of productivity) increases, so does the value of a country’s
commercial real estate assets.
• Like earlier periods of technological advancement, the dawn of AI may increase structural unemployment
in the short term but create demand for new knowledge and skills, which effective federal education and
training policies can aid.
2. RETAIL THEFT HITS MARGINS, FOOT TRAFFIC RISES
• In its Q2 earnings report, Dick’s Sporting Goods’ cited retail theft as a critical factor compressing profit
margins, shaking equities in the sector this week. While not cited as a primary factor, the report highlights
a widespread issue facing many retailers as some US cities see a spike in thefts.
• It is yet to be determined how this may affect Retail real estate. Still, falling investor confidence in the
consumer sector could trickle down to commercial activity if businesses delay expansion plans as a result.
• So far, however, retail foot traffic continues to increase and serve as a positive force for valuations, helping
offset the impact of rising “shrink” rates.
