That’s the message of the Colliers 2026 Outlook Report, “The CRE Reset: Stability Through Uncertainty.” Colliers notes that AI “will continue to be one of the most powerful transformative forces shaping business strategy and investment decisions in 2026. Adoption is shifting rapidly from pilot projects to enterprise-scale integration as organizations chase efficiency, cost savings, and competitive advantage.” But when looking at different industries, “AI adoption will progress unevenly, widening the gap in productivity, profitability, and wage growth between technology leaders and sectors slower to adopt innovative technologies.”
In the economy generally, “Investment trends are becoming increasingly bifurcated, with AI-driven sectors expanding while traditional industries lose momentum,” says Colliers.
We’ve already seen how the city’s AI industry is affecting the local housing market. AI workers are helping drive sales, but not everyone is convinced it’s a sales tsunami in San Francisco. “It’s been a trendy argument to make over the last two-plus years, and there are always anecdotes and isolated cases that involve wealthy tech buyers in San Francisco,” Courtney Jung, an agent with City Real Estate, told The Voice. But as of late 2025, she said, “it is too speculative to say that AI is ‘fueling our market’ in San Francisco. Perhaps in the next couple of years, as we see more IPOs and it becomes clear which AI companies are here for the long term, we’ll be able to say more definitively how much impact it is having [or] has had on the S.F. real estate market.”
One area it’s having a definite impact on is commercial real estate. Traditionally defined as multifamily, office, retail, warehouse, and hospitality, commercial real estate appears to be going all-in on AI. Online site Pymnts recently reported, “Under pressure to move faster and operate with leaner teams, real estate firms are turning to AI in valuation, underwriting and due diligence, areas long dominated by manual analysis and spreadsheet-based models. AI models now ingest transaction data, market comparables, zoning rules, macroeconomic indicators and alternative data sources to produce dynamic valuations that update as conditions change.”
Companies will expand their use of AI in their back office operations, but office space and housing demand from the AI industry in San Francisco isn’t guaranteed.
In demand for office real estate, Colliers’ report acknowledges that since 2024, the AI industry “has been the key driver of leasing in the San Francisco Bay Area, where several major tenants have absorbed large blocks of vacant space.” It’s the reverse trend nationally, where “AI capabilities begin to fulfill many entry-level job functions, which may lead companies to need less space.”
Data centers get their own section in the report, which tells you something about the growing heft of the sector that is growing like crazy under the AI boom. Money is flowing into the data center sector, but NIMBY forces are also expanding: “Friction is building as communities push back on data center development. A few projects have already been abandoned, and more are expected to be shelved in 2026.” The NIMBY forces uncharacteristically aren’t without merit; Colliers notes that “exceptional growth in data centers fueled by AI and cloud computing is spurring mounting challenges in power, water, and zoning availability creating new pressures.”
Is it upward-only for AI in 2026? It looks like commercial real estate companies will be expanding their use of AI in their back office operations, but office space and housing demand from the AI industry in San Francisco isn’t guaranteed. The Wall Street Journal recently reported that venture capitalists are warning of a “weeding out” of AI startups this year. That could make 2026 an interesting year to be watching San Francisco housing.
Headline of the week
“Real estate mogul Barbara Corcoran shares the ‘crazy’ work perks she’s offered her team including a free Bentley, elephant rides, and ‘the wildest parties in town’”
— Emma Burleigh (Fortune)
Go figure
$26.5 million: price of the most expensive house sale in San Francisco in 2025; the Pacific Heights four-bedroom home went for $2,603 per square foot (Compass) … $24 million: the most expensive San Francisco condo or co-op sale of 2025; the home, also in Pacific Heights but with three bedrooms, sold for $4,211 per square foot (Compass) … 10.3 percent: year-on-year increase in the median sales price of a San Francisco home (of all property types); as of November 2025, the median sale price was nearly $1.5 million (Redfin) … 40: median age of first-time U.S. home buyers (National Association of Realtors) … 05: the official number of the executive order by New York City’s new Mayor Zohran Mamdani establishing a task force to speed up the production of new housing in the city (Office of the Mayor of New York City) … 3 years: prison sentence for Matthew Thomas Onofrio, who netted tens of millions of dollars from a fraudulent real estate scheme that involved creating purchase agreements for commercial properties at inflated prices for novice investors; he then “coached his investors to lie to banks to obtain loans they could not afford based on false information.” In about two years, Onofrio did 68 deals involving $420,564,795 in fraudulently obtained bank loans. (U.S. Justice Department).
Say what?
“This year, the U.S. housing market has been described as ‘a nightmare,’ ‘very unusual’ and ‘alarming,’ along with expletives we can’t write here. And with good reason: home prices are near record highs, mortgage rates remain elevated, and not enough homes are being built to meet demand in many areas of the country.”
— Mark Worley and Asad Khan, “U.S. Housing Costs to Return to ‘Normal’ by 2030 With Stable Price Growth and Moderately Lower Rates” (Redfin News)