AI Growth Propels Tech to 2nd Place in NYC’s Office Leasing Frenzy

Technology has become New York City’s second most active leasing sector, behind finance, as the AI boom takes an expanding bite out of the Big Apple’s office supply, according to a new JLL report. Finance, law and tech now account for more than 70% of the city’s leasing activity year-to-date, up from an average of 50% throughout the 2010s.

Tech firms leased a total of 1.1 million square in the third quarter, with AI companies driving more than 60% of that total, JLL found. The trend of traditional media and advertising firms evolving into tech businesses pushed the sector to overtake legal as the city’s number two engine of leasing activity. Overall, companies leased out 1.5 million square feet of space in August and 22.5 million square feet during the year to date.

Asking rents continue to rise across all office classes as availability has dropped below 12.5% for the first time since 2018. Average direct asking rents have climbed to $86.71 per square foot, while total available space has contracted to 58.2 million square feet.

“With much of the new construction already spoken for, speculative development is back in the conversation, while owners of existing buildings are moving quickly to reposition their properties,” noted Joe Sipala, managing director at JLL in a statement. “As demand for high-end quality space is surpassing supply, the race now is to see who can deliver the next generation of space.”