AI-focused tech firms are stepping up searches for office space, and\u00a0New York\u00a0and\u00a0San Francisco\u00a0won\u2019t be the only cities to benefit from their fast expansion.<\/p>\n
Building tours by prospective AI tenants in the\u00a0U.S.\u00a0jumped 85% in the year through May, according to commercial-property data provider VTS. Searches are highly concentrated in California\u2019s\u00a0Silicon Valley,\u00a0San Francisco\u00a0and\u00a0New York, where tours increased at more than double the nationwide rate.<\/p>\n
While those places remain key markets for the artificial intelligence industry, office demand is expected to spread to other parts of the country, VTS said.\u00a0Seattle,\u00a0Chicago\u00a0and\u00a0Washington\u00a0are cities that are already showing signs of AI growth.<\/p>\n
\u201cWe will 100% see spillover,\u201d said\u00a0Ryan Masiello, chief strategy officer of VTS.<\/p>\n
AI tenants have helped drive a recovery in the\u00a0U.S.\u00a0office market, easing the pain for landlords who\u2019d been saddled with large vacancies after the pandemic cratered demand for space.\u00a0San Francisco\u00a0was especially hard-hit.<\/p>\n
What\u2019s more, companies that focus on AI are looking at relatively large offices. Spaces they toured in the year through May averaged 37,000 square feet, 37% bigger than the average for traditional tech firms, VTS said.<\/p>\n
Any company that\u2019s \u201cbeing aggressive about growth\u201d has to acquire space before it\u2019s really needed, Masiello said. But they\u2019re more conservative than during prior tech booms, when well-funded firms would grab massive swaths of space with the hope that headcounts would catch up.<\/p>\n
This time, \u201cit\u2019s not \u2018growth at all costs,\u2019\u201d he said. \u201cRevenue is much more real within these companies than it was in past cycles.\u201d<\/p>\n
Data from VTS is an early indicator. There\u2019s often a six- to 12-month lag before a building tour results in a signed lease, according to the firm, and not all end in agreements.<\/p>\n
Still,\u00a0San Francisco\u00a0is showing tangible signs of a rebound, according to\u00a0Chris Roeder, who leads the\u00a0San Francisco\u00a0brokerage team at\u00a0Jones Lang LaSalle Inc.<\/p>\n
\u201cIf you look at the large blocks of space in the market right now, there\u2019s definitely a lot less than there was six months ago and it\u2019s getting picked over,\u201d Roeder said.<\/p>\n
This year,\u00a0Anthropic\u00a0expanded its\u00a0San Francisco\u00a0footprint by leasing an entire building in an area of the SoMa neighborhood that\u2019s known as \u201cAI Alley.\u201d A few blocks over, AI startup LangChain is taking about 70,000 square feet, a space much larger than its previous office, according to the San Francisco Business Times.<\/p>\n
In\u00a0New York,\u00a0Anthropic\u00a0agreed to rent a property in downtown\u00a0Manhattan\u00a0as part of plans to double its headcount in the city, the\u00a0New York Times\u00a0reported this week.<\/p>\n
As competition intensifies in go-to markets, tenants seeking space may be forced to decide whether to pay more, sign longer leases or move to other cities. Not all areas will have the opportunity to cash in on the AI spillover, according to Masiello.<\/p>\n
\u201cCities that don\u2019t have the best public transportation, that don\u2019t have the best type of talent, I think at the moment are losing,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"AI-focused tech firms are stepping up searches for office space, and\u00a0New York\u00a0and\u00a0San Francisco\u00a0won\u2019t be the only cities to…\n","protected":false},"author":2,"featured_media":405490,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[387,181,101,103,102,104,106,105,1970],"class_list":["post-405489","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-francisco","tag-business","tag-latest-headlines","tag-san-francisco","tag-san-francisco-headlines","tag-san-francisco-news","tag-sf","tag-sf-headlines","tag-sf-news","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/405489","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=405489"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/405489\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/405490"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=405489"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=405489"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=405489"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}