After five years of decline, “for rent” signs are vanishing from New York City’s office towers. A new wave of deep-pocketed tenants has arrived: AI companies. Despite widespread fears that artificial intelligence threatens the economy, firms like Anthropic, Palantir, and OpenAI are hiring aggressively in New York. They are adding significant office space and driving a revival for the city’s struggling commercial centers. Legacy tech firms are also renewing their commitment to the boroughs as they invest heavily in their own AI capabilities.
In this specific regard, their arrival acts as a balm for the city. Vacancies remain higher than pre-pandemic levels in all but the most exclusive buildings. Furthermore, the tech sector previously lagged behind finance in bringing workers back on-site. Yet, even as political uncertainty loomed with Zohran Mamdani’s mayoral campaign, AI companies remained undeterred. Local business leaders had predicted his election might scare off wealthy tenants, but the market proved them wrong.
Consequently, AI companies lifted New York City’s office market to its best leasing year since 2014. Commercial property firm Savills reports that AI firms were among the most active players in 2025. They added approximately 1 million square feet across Manhattan alone. This figure represents a staggering 152% jump from the prior year. Moreover, these firms are currently seeking an additional 1.4 million square feet. Legacy tech firms contributed another 2.1 million square feet to their New York footprints.
“Every industry and company is thinking about how to implement AI technology, and New York is ground zero for that conversation,” said Julie Samuels, CEO of Tech:NYC. She emphasized that every major player now maintains a presence here. New York has long served as America’s second-biggest tech hub behind the Bay Area. During the pandemic, Manhattan and San Francisco saw tenants flee and rents fall faster than other US cities. However, New York recovered more quickly, buoyed by return-to-office mandates from finance giants like Goldman Sachs and JPMorgan Chase.
By 2024, Big Tech also began bringing employees back to their desks rapidly. Fast-moving developments in AI prompted companies of all sizes to reestablish office culture. OpenAI leased roughly 90,000 square feet in SoHo for its first New York office. Earlier this year, Elise AI announced plans to move to the historic Tiffany building to expand by over 50%. Similarly, AI marketing platform Bluefish declared it would establish a headquarters in Manhattan’s Flatiron district. These moves signal a strong vote of confidence in the city.
Anthropic, the startup behind the chatbot Claude, is actively seeking to expand its Manhattan offices. Financial tech company Ramp is adding two floors near Madison Square Park. Even Palantir Technologies, whose co-founder Joe Lonsdale criticized Mayor Mamdani during the election, is looking for more space. Lonsdale, who no longer manages daily operations, did not respond to requests for comment. Nevertheless, Palantir continues to grow its physical footprint in the city.
“Mamdani is further left than most New York tech CEOs are, but in general, people are supportive of him bringing new energy,” said Kevin Ryan, founder of venture capital firm AlleyCorp. Ryan bought a six-story building in Little Italy in 2022, expecting to rent space for $75 per square foot. Now, he leases offices for 40% more. This surge reflects the intense competition for quality space among AI companies.
While California’s Bay Area remains the largest hub, New York is a solid runner-up. The city hosts more than 9% of the country’s AI workers, surpassing Seattle, Boston, and Los Angeles. Overall tech employment in the five boroughs grew 12% from 2020 to 2024. Analysts expect an additional 13% growth by 2029. “Companies that may have started in the Bay Area realize it’s a very crowded field,” said Andrew Lim, a senior director at JLL. He noted that New York offers the next best environment for talent and capital.
The number of tech firms in Manhattan rose by 21% from 2020 to 2024. New York City now boasts some 8,750 startups, exceeding San Francisco. There were more than 25,000 AI-related job openings posted last year, a nationwide high. In 2025, tech firms accounted for about 15% of office leasing. Only financial services firms signed more leases, capturing 36% of the market.
However, the boom feels somewhat precarious. It rides on the success of companies creating tools that could eventually replace many office workers. Fears about AI-induced layoffs continue to roil various industries, including real estate. Shares of major landlords like SL Green Realty Corp. and Vornado Realty Trust have fallen this year due to these broad concerns. Yet, for the moment, rising demand for workers bolsters the arguments of AI optimists. They argue the technology will ultimately boost productivity and create more jobs.
Startups have given a crucial boost to the struggling middle of the market. As space tightens in prime areas, companies are exploring other commercial districts. Midtown South and the Financial District, where recovery lagged, are now seeing increased interest. Data-labeling startup Scale AI recently moved from Chelsea to the Financial District to accommodate a workforce that doubled to 500. On average, AI companies agreed to pay about $88 per square foot in 2025. Some deals reached as high as $210, well above the citywide average of $78.
Topline Pro, an AI-powered engine for home servicers, chose space in the converted Domino Sugar Refinery in Williamsburg, Brooklyn. Co-founder Nick Ornitz cited proximity to employees’ homes as a key factor. The location offers pet-friendly policies, sweeping skyline views, and a fancy fitness club that serves as a rec center. Topline requires New York workers to be in the office five days a week. Therefore, amenities matter significantly. “If we’re going to be in the office, we want it to be a place where folks want to be,” Ornitz said.
As new companies arrive and established ones upgrade, rising demand is pushing up asking rents. Tech firms accounted for nearly one-third of the top 20 largest leases in Manhattan last year. This share is more than triple the figure from the year before. In December, PayPal signed a lease in Hudson Square, expanding near neighbors Google and Disney. Amazon.com Inc. has also grown across the city, buying a building on Fifth Avenue and leasing additional nearby offices.
Most recently, Harvey AI expanded to take more than 185,000 square feet in the former MetLife headquarters at One Madison Ave. The redeveloped building opened in 2023. When Harvey AI signed its new lease, developer SL Green issued a celebratory press release. The building is finally fully occupied. This milestone underscores how AI companies are transforming the New York real estate landscape.
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