Artificial intelligence is becoming a major driver of office demand, but the impact is being felt unevenly across U.S. markets.
According to VTS, AI-related office requirements increased 85% year over year nationwide and 179% across the country’s largest office markets. AI companies now account for 34% of active technology leasing requirements tracked by the firm, representing 16.8 million square feet of potential demand.
Rather than lifting entire office markets, the growth is concentrated in specific neighborhoods where AI companies are competing for high-quality space, according to CBRE.
AI Funding Drives New Office Demand
The surge in AI office requirements follows record levels of investment in the sector. U.S. private AI funding reached $206 billion in the first quarter of 2026, nearly matching total funding from all of 2025, according to CB Insights.
That capital is supporting hiring among major AI companies, creating demand for office space in markets with established technology talent pools.
VTS tracked 453 active AI office requirements across 17 U.S. markets. These tenants are seeking larger spaces than the average technology company, with AI requirements averaging 37,000 square feet compared with 27,000 square feet across the broader tech sector.
San Francisco Remains the AI Office Hub
San Francisco continues to dominate AI-related office demand, accounting for roughly 5 million square feet of active requirements tracked by VTS. Silicon Valley follows with 2.8 million square feet, while New York ranks third.
Together, those three markets represent 63% of all AI-related office demand in the report.
Large blocks are becoming increasingly important, with 91 AI requirements exceeding 50,000 square feet. Nearly three-quarters of that demand is concentrated in six submarkets, including areas of San Francisco, San Jose, Midtown and Midtown South in New York, and Austin districts outside the central business district.
Growth Expands Beyond Traditional Tech Markets
Some secondary markets are also seeing significant increases. Seattle recorded the fastest growth, with AI demand rising 390% year over year. Northern Virginia saw demand increase 169%, supported in part by defense-focused AI companies.
Austin and Atlanta also gained momentum, though their AI tenants are more concentrated among established technology companies rather than newer AI-focused firms.
Office Recovery Depends on the Neighborhood
The data highlights how AI demand is benefiting select areas rather than entire cities. One San Francisco submarket alone accounts for about a quarter of tracked AI office demand, creating stronger competition for space in some districts while nearby areas continue facing high vacancy.
VTS notes that the pattern resembles earlier technology-driven office cycles, where tech expansion eventually encouraged growth from other industries. In San Francisco, professional services leasing increased 33% over the past year after technology requirements surged.
As AI adoption expands, VTS expects demand to spread into additional markets, but the strongest opportunities may remain concentrated in locations with deep talent pools and existing technology ecosystems.
