What does the new UK Prime Minister mean for AI and commercial real estate? 

The first week of the Burnham government has already given a clear indication of the central role AI will play in its policy agenda. Early announcements position AI not only as a driver of economic growth, but also as a tool for public service transformation. Delivering on these ambitions will require a coordinated approach encompassing the right skills and the digital and physical infrastructure needed to support AI at scale. Importantly, the promotion of Kanishka Narayan to Minister of State for AI, his invitation to attend Cabinet and the creation of a new AI Taskforce all suggest AI will sit high within Government decision-making moving forward.  

Burnham’s track record offers another indication of how he may approach this agenda. As Mayor of Greater Manchester, he championed AI innovation, collaboration between universities, businesses and the public sector and investment in skills to support regional economic growth. This aligns with his long-standing support for greater devolution, arguing that regions should have the powers to build on their own economic strengths. While national policy is still emerging, these signals suggest he sees AI not only as a productivity tool but also as a catalyst for growth across all of the UK.  

What does this mean for commercial real estate? 

The impact on real estate could be broad. Firstly, if AI supports business growth and innovation clusters emerge, occupier demand could evolve alongside them, with opportunities extending beyond London. Cities such as Manchester, Leeds, Birmingham and Bristol already have strong digital, technology and research ecosystems, while government-backed AI Growth Zones could accelerate demand for office space, laboratories, industrial units and supporting amenities. 

Second, AI adoption is likely to influence the type of buildings  occupiers  need.  Reliable power and resilient digital connectivity will become increasingly important as AI becomes embedded within day-to-day operations within organisations. Occupiers may place greater emphasis on access to high-capacity fibre networks, backup power systems, enhanced cooling capabilities and smart building technology that can improve operational efficiency.

Finally, widespread AI adoption will require significant investment in enabling infrastructure. Data centres, electricity networks, grid capacity and fibre connectivity are all becoming critical components of the digital economy, creating new development and investment opportunities across the real estate sector. The rapid growth of data centre demand is already driving land acquisition activity around major power hubs and fibre corridors, while investment in substations, battery storage facilities and renewable energy projects is becoming increasingly important. Locations with access to available power and digital infrastructure may emerge as key growth markets, attracting both occupiers and investors seeking exposure to the infrastructure underpinning the AI economy.

While it is still too early to predict the government’s full AI strategy, the early signals point to AI being positioned as central to the UK’s growth agenda. If that continues, commercial real estate will play a fundamental role in enabling the infrastructure, buildings and places that support the next phase of economic growth. 

To learn more about the impact of AI on buildings, workplaces and real estate investment, explore the latest edition of Knight Frank's Quantifying Technology in Real Estate report.