My quest for ‘AI-proof’ real estate

While AI’s potential to automate processes and enhance decision-making is well-known, it also has raised concerns about its impact on certain segments of the real estate sector, according to Fidelity Portfolio Manager Steve Buller, who is carefully navigating fast-evolving changes in seeking to avoid vulnerable categories, capitalize on pockets of AI-driven strength, and support long-term investment resilience.

“The ripple effect of AI’s disruptive potential on real estate is increasingly evident,” says Buller, who manages Fidelity^® Real Estate Investment Portfolio (FRESX). “As this transformative technology rewrites the rules of the game, understanding how AI intersects with real estate, for better or worse, is essential.”

The fund holds securities of companies that own and, in most cases, operate commercial real estate properties. As manager, Buller employs a bottom-up (or stock-by-stock) approach, selecting what he believes are reasonably valued, high-quality real estate investment trusts.

He explains that some pockets of real estate are more exposed to the power of AI than others, leading him to tilt the portfolio toward areas he believes are less vulnerable.

Buller says data centers have emerged as a bright spot, with Equinix (EQIX) and Digital Realty Trust (DLR) – sizable fund positions as of March 31 – leading the charge amid the explosion of AI-driven demand for data storage and processing power. He also believes health care and retail strip-center properties are less exposed to the technology.

By contrast, he notes that commercial real estate brokerage stocks – including portfolio holdings CBRE Group (CBRE) and Jones Lang LaSalle (JLL) – face a legitimate threat and were under significant pressure in early 2026, despite having since rallied strongly with the broader market.

In addition to providing property management services, companies in this industry often serve as agents for buyers and sellers, supporting leasing efforts and sharing information on potential transactions, according to Buller.

“My concern is that AI’s ability to automate leasing and transaction intelligence could chip away at these business models,” he says.

Offices are another area of the REIT market that has been under pressure for years, and Buller believes AI could add to the strain. To that end, he has avoided office REITs for several years now.

“Despite a slight nationwide pickup in office leasing – and even with certain historically strong geographic markets, such as Manhattan, showing strength – I worry that the lack of hiring among new university graduates could be a harbinger of reduced employment and, thus, lower demand for office space down the road,” Buller says.

Other segments he believes could face challenges include real-estate-adjacent businesses, such as software companies and information providers that serve the real estate sector. “I’m watching to see whether AI proves capable of delivering the same offerings to clients faster and cheaper,” he concludes.

For specific fund information, including full holdings, please click on the fund trading symbol above.