Authored by Rob Sabo via The Epoch Times,
Artificial intelligence (AI) firms are absorbing office space in primary markets such as San Francisco and New York City at a record pace, and the sector’s voracious demand for office space to build out development teams and products has begun spilling into a select subset of submarkets as well.
National AI office demand was up 85 percent in the 12 months through May and spiked 179 percent in major AI hubs, a new AI report published on July 9 by AI-powered commercial real estate platform VTS states.
AI companies represented office demand of 16.8 million square feet across 17 markets during the period, VTS senior research manager Rene Moreira noted.
However, three metro areas represented nearly two-thirds of total office demand from AI companies, with San Francisco—the global epicenter for AI talent and development—accounting for 25 percent.
Office properties in San Francisco and Silicon Valley, California, and New York accounted for 63 percent of all current AI leasing, Moreira said.
“San Francisco alone sits at 5 million square feet, nearly a third of the national total,” he said.
Unprecedented office demand from AI companies in San Francisco is powering the city’s office market to a modest recovery after the COVID-19 pandemic. In the second quarter of 2019, San Francisco’s office market hit a vacancy rate of 4.7 percent. Vacancy soared following work-from-h
