Artificial intelligence is bringing investors back to the office market, but only a small group of buildings are attracting serious attention.
Institutional investors are targeting trophy office towers in cities where AI and technology companies continue signing leases, betting these properties will hold their value while much of the office market remains under pressure, according to BisNow.
AI Leasing Is Focused on a Handful of Markets
The strongest demand is centered in Manhattan and San Francisco, where AI firms continue leasing premium office space. Investors are also watching opportunities in Chicago, Miami, Phoenix, and parts of the Sun Belt.
Some buyers say office prices in New York and San Francisco have already climbed enough to make other markets more attractive.
Investors Want the Best Offices
Office values have fallen sharply since the pandemic, creating buying opportunities for investors willing to return to the sector.
Recent outlooks from JLL, Newmark, and PGIM point to modern, high-quality office buildings as one of commercial real estate’s strongest-performing property types. Many investors are pursuing buildings that already attract AI and technology tenants or can be upgraded to compete for them.
Most Office Buildings Are Still Struggling
The renewed interest is limited to a small part of the market.
About 20% of U.S. office space remained vacant at the end of the first quarter, and many older buildings continue to lose tenants. Higher interest rates and economic uncertainty have also slowed office sales in recent months.
AI Is Creating Winners and Losers
Many investors expect AI companies to keep paying for premium office space in top business districts, even if they lease less space overall.
That leaves older buildings, particularly those outside major office hubs, facing a tougher path as companies concentrate their offices in a smaller number of high-quality locations.
