AI could automate more than a third of construction work: McKinsey

Why this matters

The prospect that AI could automate over a third of construction work signals a potential inflection point for US commercial real estate development and capital deployment. Construction has long been a bottleneck for new supply, with labor shortages and rising costs constraining project timelines and budgets. If AI-driven automation meaningfully accelerates construction processes or reduces reliance on skilled labor, it could ease these supply-side constraints, thereby influencing development risk profiles and underwriting assumptions. For institutional investors and lenders, this shift may recalibrate the cost and timing dynamics embedded in pro forma models, potentially improving project feasibility and returns. However, the choice between building AI capabilities in-house versus outsourcing to technology providers introduces new strategic considerations for developers and operators. Capital allocators should monitor how adoption curves evolve, as early movers might capture operational efficiencies that translate into competitive advantages in sourcing and executing deals. Moreover, the integration of AI into construction workflows could alter the risk landscape for construction lending, with implications for loan structuring and monitoring. While the full impact remains uncertain, this development underscores the growing intersection of technology and hard assets, a trend that will shape capital flows and sector fundamentals in the years ahead.

Editorial analysis · AI-assisted

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