San Francisco is still on its rebound, with office demand set to skyrocket for the second year in a row.<\/p>\n
In 2026, the City by the Bay is expected to see its office leasing activity total 12.8 million square feet, representing a year-over-year growth of 15 percent, according to a new report from software company VTS<\/a>. Last year, VTS predicted tenants would lease 9 million square feet in San Francisco. They ended up taking 11.1 million \u2014 a 59 percent jump from the year prior.<\/p>\n SEE ALSO: Brooklyn Bridge Fencing Club Going \u2018En Garde\u2019 at 295 Front Street<\/a><\/p>\n Meanwhile, New York City\u2019s office leasing activity is set to reach 39.8 million square feet, a 6 percent year-over-year increase. Gotham also exceeded expectations in 2025, with total office leasing of 37.5 million square feet, compared to VTS\u2019s predicted 34 million square feet. (VTS predicts office demand by the size and nature of new tenants entering the market, using existing tenant demand data to make forecasts.)<\/p>\n \u201c[San Francisco and New York City are an] important barometer for the key industries they represent,\u201d Max Saia, senior research adviser at VTS, told Commercial Observer. \u201cYou could make the case that New York, just given its sheer size, is such a bellwether for the finance industry in particular, but also legal and tech and creative.<\/p>\n \u201cWhereas San Francisco, with all the new AI companies and tenants, it\u2019s just such an important barometer for the state of the tech market as a whole and how that\u2019s translating, or not, to office leasing demand,\u201d Saia added.<\/p>\n Following the end of the COVID-19 pandemic, San Francisco has seen an enormous AI-fueled expansion in leasing in the tech sector. In fact, the city claimed 14 of the largest U.S. office leases by square footage in 2025, totaling 4.3 million square feet, according to a CBRE report<\/a> released last week. And 10 of those 14 leases were signed by tech companies and accounted for 58 percent of the 5.7 million square feet that tech companies leased across the entire country, the report found.<\/p>\n That momentum has already carried over into 2026, as AI firm Anthropic<\/a> signed a lease for 420,000 square feet at Downtown San Francisco\u2019s 300 Howard Street in January, according to VTS\u2019s report. OpenAI<\/a> also now occupies nearly 1 million square feet across Mission Bay.<\/p>\n \u201cThere\u2019s a lot of tech demand flowing, and there\u2019s a lot of tech demand currently in the market,\u201d Saia said. \u201cAnd so that gives us quite a bit of confidence. But we also do know that there is one camp of market participants that is a little bit weary of: Are we in a bubble? Is the capex behind all this sustainable? So [our prediction] does factor in both those views, but it\u2019s primarily rooted in just our data first and foremost. It\u2019s predominantly still a tech growth story, as far as I can tell.\u201d<\/p>\n VTS\u2019s report acknowledges that a pullback in AI funding could significantly reduce demand in San Francisco\u2019s office sector, as the city is heavily reliant on a single sector: tech. New York City, on the other hand, has a wide range of tenants taking its office space.<\/p>\n New York City\u2019s predicted 6 percent growth this year is due to its leasing strength by financial services tenants, \u201cflight-to-quality dynamics, and sustained return-to-office momentum,\u201d the report said.<\/p>\n Notable large office leases completed in New York City in 2025 included J.P. Morgan Chase<\/a>\u2019s expansion<\/a> to nearly 500,000 square feet at 390 Madison Avenue even after opening its headquarters at 270 Park Avenue<\/a>, Citadel<\/a>\u2019s commitment for 850,000 square feet at 350 Park Avenue<\/a>, and trading firm Jane Street Capital<\/a>\u2019s expansion<\/a> to nearly 1 million square feet at 250 Vesey Street.<\/p>\n \u201cNew York\u2019s obviously much closer to its pre-pandemic totals than most other markets are,\u201d Saia said. \u201cYou know, pick your metric. There\u2019s a lot of demand in the market. It did grow a decent amount year-over-year, and so we\u2019re expecting a continuation of that.\u201d<\/p>\n