The artificial intelligence companies are causing a substantial rise in the office leasing market in Manhattan. This is making this the strongest year of demand the city has had in over ten years. Significantly, this increase in leasing activity can be traced to the increased demand for office space AI companies are generating. This is because more businesses seek to expand their physical presence in New York. This increase reflects the increased demand for office space in Manhattan due to the arrival of these companies. A report by the commercial real estate company Savills shows that Manhattan saw leasing of 42.9 million square feet.
Last year, a number of the big AI firms from Silicon Valley were among the most active tenants. OpenAI, the company that developed ChatGPT, has obtained approximately 90,000 square feet at the Puck Building in SoHo for its first office in New York. EliseAI, a company that offers services in the fields of housing and healthcare, is expanding its headquarters by taking up about 109,000 square feet at 401 Fifth Avenue in Midtown. Harvey AI, a generative AI platform designed for use by legal professionals, has also increased its presence in Midtown South. It is now occupying more than 185,000 square feet at One Madison Avenue.
At the same time, the major players in AI, Anthropic and Palantir, have been quickly growing their workforces in New York. This growth is happening even though there remains public concern about the technology, according to Bloomberg. As these firms continue to grow, the increased demand for office space is becoming more evident. Notably, increased demand for office space and AI has become a consistent trend in Manhattan. Both of these companies are said to be looking at further expanding their operations in the city.
Midtown South- Popular AI Location
Cushman & Wakefield found that companies involved in technology and artificial intelligence accounted for one-third of all major new leases entered into in Midtown South last year. This highlights the increasing presence of the sector in some of Manhattan’s most desirable commercial areas. Nevertheless, the majority of this demand is focused on top-end, well-equipped “trophy” buildings. At the same time, older office complexes still face high vacancy rates. Midtown South is a set of office space in Manhattan in 2025 that represents a 152% increase compared to the previous year. These companies also have plans to add another 1.4 million square feet in the future. In fact, the increased demand for office space among AI companies has outpaced projections. Broadly speaking, other tech companies, a number of which have made substantial investments in AI, added a further 2.1 million square feet throughout the city.
It is clear that there is an increased demand for office space across the board. Especially as many of these companies are still looking for more room to expand; JLL Research states that the number of technology companies in Manhattan increased by 21 percent between 2020 and 2024. Although the growth of AI has helped revitalize the city’s office sector, there are concerns that the surge might not continue.
Effects of AI across the Office Market
This is because there is growing worry that AI could eliminate entry-level jobs and lead to wider layoffs in various industries. Because of the increased demand for office space and the lack of new buildings, average asking rents rose by 2.8% from 2024 to 2025. The price hit $77.57 per square foot, as reported by Savills. This marks a reversal on the trend seen during the pandemic. At that time, a large number of tenants left the city and rents in New York dropped faster than in most other major U.S. metropolitan areas, according to the brokerage firm Jones Lang LaSalle.
Moreover, New York’s recovery has been faster than that of other cities, a point noted by Bloomberg, due to return-to-office requirements from large financial firms such as Goldman Sachs and JPMorgan. In summary, the increased demand for office space AI trends are influencing rent prices and tenant choices significantly. Notably, the increased demand for office space has been a key factor in this recovery.
New York is still the second-largest technology center in the country, coming behind only the San Francisco Bay Area. It houses more than 9 percent of the United States’ AI workforce and has over 25,000 job listings related to AI, as stated by JLL Research and in a joint report by Tech: NYC and the Center for an Urban Future. The same report noted that New York has around 8,750 startups—more than San Francisco.
At the same time, the major players in AI, Anthropic and Palantir, have been quickly growing their workforces in New York, even though there remains public concern about the technology, according to Bloomberg.
Cushman & Wakefield found that technology and artificial intelligence companies accounted for one-third of all major new leases in Midtown South last year, highlighting the sector’s growing presence in some of Manhattan’s most desirable commercial areas. Nevertheless, the majority of this demand is focused on top-end, well-equipped “trophy” buildings, while older office complexes still face high vacancy rates. According to Bloomberg, AI companies alone occupied approximately 1 million square feet of office space in Manhattan in 2025 — a 152% increase over the previous year — and plan to add another 1.4 million square feet in the future. In fact, the increased demand for office space AI companies create has outpaced projections.
Broadly speaking, other tech companies, several of which have made substantial investments in AI, added a further 2.1 million square feet throughout the city. There is an increased demand for office space across the board. This is especially true as many of these companies are still looking for more room to expand; Palantir is one of them. JLL Research states that the number of technology companies in Manhattan increased by 21 percent between 2020 and 2024.
Artificial Intelligence Companies look to Expand their Footprint in NYC
Although the growth of AI has helped revitalize the city’s office sector, there are concerns that the surge might not continue, since there is growing worry that AI could eliminate entry-level jobs and lead to wider layoffs in various industries.
Because of the increased demand for office space and the lack of new buildings, average asking rents rose by 2.8% from 2024 to 2025. The price hit $77.57 per square foot, as reported by Savills. This marks a reversal on the trend seen during the pandemic.
At that time, a large number of tenants left the city and rents in New York dropped faster than in most other major U.S. metropolitan areas, according to the brokerage firm Jones Lang LaSalle. Moreover, New York’s recovery has been faster than that of other cities. This point was noted by Bloomberg, due to return-to-office requirements from large financial firms such as Goldman Sachs and JPMorgan.