Artificial intelligence firms are emerging as a key driver of New York’s office recovery, moving quickly to secure space as they scale.
Data from JLL shows 8.5 million square feet leased in Manhattan so far this year, with AI companies taking 415,000 square feet. The sector has already reached half of its 2025 leasing volume in the first quarter alone.
Vacancy has dropped to 13.5%, while asking rents have risen to $83.51 per square foot.
Leasing at Startup Speed
AI tenants are compressing timelines. Brokers report companies touring and signing leases within weeks, a pace far faster than traditional office deals, according to BisNow.
Most are targeting short-term, flexible, plug-and-play spaces, but supply is tightening as more companies return to the office. This has sparked competition for available inventory, including off-market deals.
Big Spending, Bigger Footprints
Well-capitalized firms are paying premiums to secure space.
Nscale, backed by Nvidia, signed a lease at One Vanderbilt for about 7,200 square feet at $320 per square foot—one of the city’s priciest deals.
Harvey AI has also expanded rapidly at One Madison Avenue, growing to 185,000 square feet after a recent funding round.
Average AI lease sizes have doubled, with more than half including space for future growth.
Opportunity—and Risk—for Landlords
The surge is drawing comparisons to past tech booms, when rapid leasing was followed by pullbacks.
Landlords now face a tradeoff: secure high rents from fast-growing AI startups or prioritize more stable, long-term tenants. Many are opting for shorter leases to balance that risk.
At buildings like The Refinery at Domino, AI firms are taking space quickly and often expanding, helping fill vacancies but reinforcing the sector’s fast-moving, high-risk profile.
A Different Kind of Office Tenant
Unlike many hybrid-era companies, AI firms are heavy office users, with teams often working in person most days of the week.
That demand is helping stabilize occupancy in the short term, even as questions remain about how durable this growth will be.
