Most of the workforce still isn’t comfortable with artificial intelligence (AI) in the workplace, but development of the technology could be saving physical workspaces.
Traditional office leases have been in dramatic decline since the pandemic overall, but there is growing demand for AI professionals that is driving increased office leasing activity across major North American tech hubs.
A new report from CBRE reveals that major tech cities like San Francisco, Seattle, and New York City, account for a substantial 44% of AI-specialty tech jobs in the United States. The data indicates that in the first half of 2024 AI-specialty jobs postings increased 27% — reaching 44,000.
The increase in lease activity from AI-related companies coincides with the increase in these job postings. For example, the San Francisco Bay Area — which has recently seen record office vacancies in the second quarter of 2024 — recorded that one-quarter of its desperately needed new office leases in the city’s downtown areas were signed by AI companies.
The report reveals that AI-related job growth is spreading across North America and it’s providing a small boost to commercial real estate activities.
“Technology’s importance in society and to real estate utilization has been accelerated and disrupted,” according to CBRE’s report. “This will create new opportunities for both real estate occupiers and investors in tech talent markets.”
Many AI-related tech jobs aren’t fully in-office. CBRE notes that around 15% of U.S. tech job postings still offer fully remote work options, highlighting the persistence of flexible work models despite the growth in office leasing.
While traditional office spaces may be shrinking in some sectors due to factors like remote and hybrid work models, the tech industry’s need for specialized talent, especially in AI, is creating a unique demand for office spaces.
Cities across America that are considered to have strong tech talent markets, like San Francisco and New York, are seeing more leases signed by these AI companies. This suggests that, even as preferences for workspaces change in the future of work, tech-driven companies and organizations could sustain a demand for commercial real estate in these key markets.
