Senior executives in New York expect their businesses to expand even as uncertainty surrounds the local economy. In a KPMG survey of 103 leaders at companies with at least $50 million in revenue, 96% said they are confident in their company’s growth prospects, up from 90% a year earlier. Confidence in the city itself was lower at 86%, suggesting concern about local conditions despite strong corporate outlooks.
New York closed last year with its strongest office leasing volume since at least 2019, and expansion plans continue. 70% of surveyed companies intend to increase their commercial real estate footprint within the next 12 to 18 months, slightly higher than last year’s figure, according to CoStar.
Executives increasingly view offices as a tool for attracting and retaining talent. Most respondents said workplaces should support connection and relationships, and nearly all said they actively encourage social interaction at work.
AI reshapes workforce composition
Hiring expectations are weakening even as expansion plans grow. Only 66% of companies expect to increase hiring this year, down from 77% previously, as automation changes staffing models. Most executives are prioritizing workers with AI skills, while more than half report reducing entry-level roles and a smaller share say automation has already cut headcount.
Tech demand offsets downsizing risk
Real estate professionals say AI adoption has not reduced space demand. Technology and AI-related companies have become a major leasing driver, collectively taking roughly one million square feet in the city last year. The growth of these tenants has balanced potential reductions elsewhere.
Expansion plans extend beyond office space. 81% of companies see acquisition opportunities, and transaction activity has picked up as financing costs ease. Commercial property investment sales in New York rose 24% to $35.3 billion, led by a surge in office trades. Foreign investors continue to treat Manhattan property as a relatively stable long-term asset.
A smaller workforce inside better offices
Companies are committing to physical offices designed for collaboration while hiring grows more slowly due to automation. The result is a model built around fewer employees, higher-skill roles and higher-quality space.
