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AI office demand is concentrating in San Francisco, San Jose and NYC
AI office demand is up 85% year-over-year nationally, and nearly three-quarters of current AI office square footage is tied to five submarkets across three cities.
Commercial Observer argues that the key question for commercial real estate leasing in the AI era is not whether companies will bring workers back to offices, but where AI firms are choosing to invest, hire, and build because those decisions can shape the next office cycle. The outlet cites concentration of demand in major AI hubs. In its tracked markets, one San Francisco submarket, the non-core central business district including South of Market and Mission Bay, accounts for 25% of all active AI office demand, while San Francisco’s South Financial District contributes 16%, San Jose 14%, and New York City’s Midtown South and Midtown add 11% and 8% respectively. Across these five submarkets spanning three markets, nearly three-quarters of current AI square footage is attributed to active AI office demand, according to the article. Commercial Observer also links the leasing picture to faster scaling among AI developers. It says national AI office demand is up 85% year-over-year, and that demand is up 179% across the industry’s largest AI hubs. The story notes OpenAI raised $122 billion in February at an $840 billion valuation and that Anthropic followed with a $30 billion Series G at a $380 billion valuation, describing the investment environment as more revenue scaling than headcount growth. The article further describes how staffing needs may influence where demand lands, referencing Nvidia CEO Jensen Huang’s view that software engineers focus on problem solving. It argues that the firms expanding in these markets are not targeting junior coding talent available broadly, but instead seeking senior problem-definers who decide what gets built and why, with AI said to amplify the value and clustering of that talent.