June 9, 2026
For the better part of five years, "office real estate" and "trouble" seemed to go hand in hand. Remote work hollowed out skyscrapers, vacancy rates climbed, and investors braced for a prolonged recovery.
But something has quietly shifted, and it has a lot to do with the race to build artificial intelligence. A wave of AI-driven demand is breathing new life into the office market, and the numbers are hard to ignore.
The headline figure comes from CBRE's 2026 Tech Gateway Office Markets report: in the first quarter of 2026, tech companies accounted for 22.7% of all U.S. office leasing activity, outpacing every other industry. That's up from 16.8% of total U.S. office leasing for the full year of 2025
The fuel behind it? Venture capital. U.S.-based AI startups have raised approximately $578 billion in venture funding between 2020 and Q1 2026, with nearly three-quarters of that coming in just the last two years. The scale of that investment has translated directly into demand for physical office space.
Not all markets are sharing equally in this recovery, and that matters enormously if you're thinking about where to allocate capital. San Francisco and Silicon Valley remain the undisputed epicenter. AI companies have leased roughly 21 million square feet in those two markets since 2019 alone. Tech and AI firms accounted for 55% of all leasing activity in the Bay Area in 2025 alone.
But the story extends beyond California. AI companies leased an additional 9.4 million square feet across Manhattan, Boston, and Seattle over the same period. In New York specifically, the office market is posting some of its strongest momentum in decades.
Tenants inked 4.2 million square feet of leases in May 2026, a 35% year-over-year increase, putting the market on pace for its best performance since 2000, according to Colliers.
That's the question every serious investor should be asking. The answer, based on what the data suggests, leans toward sustained growth — with some important nuance.
AI companies aren't just signing leases; they're making long-term bets on where they'll build their teams. VC investment in AI is expected to remain elevated for years, and CBRE notes a growing pipeline of AI-related IPOs, which typically precede further headcount expansion and space needs.
The broader economic logic is straightforward: you can't build large language models and data infrastructure entirely from home. These companies need collaborative, well-equipped spaces to attract and retain world-class talent.
That said, the recovery is concentrated in a handful of "tech gateway" markets. Secondary markets and older Class B and C office stock are not seeing the same tailwinds. The flight to quality is real — AI tenants want modern, amenity-rich buildings in innovation-dense neighborhoods.
Office real estate was written off prematurely by many after the pandemic. The AI revolution is proving that human collaboration and proximity still matter enormously when the work involves cutting-edge research and development. Whether this recovery broadens beyond the top tech markets remains to be seen, but the direction of travel is clear.
Disclaimer: This content is intended for informational and educational purposes only and is not intended to be construed as legal, tax, financial, or insurance advice. Every property and tax situation is unique. Please consult a licensed attorney, CPA, or tax professional regarding your specific circumstances before making any decisions related to property improvements, tax assessments, or real estate transactions. Mohammed M. Rahman is a licensed real estate broker in New York. Contact: Mo@ClosedByMo.com.
