Artificial intelligence startups signed leases for more than 414,000 square feet of Manhattan office space in the first quarter of 2025, nearly double the 845,000 square feet they took in all of 2024, according to JLL. Companies like 10x, which pays $28,500 monthly for a 3,000-square-foot SoHo loft, are leasing spaces that sit largely empty—10x had one employee when it signed in December and now has four for 30 desks. Fazeshift pays $7,022.95 monthly for an 11-desk Park Avenue co-working space occupied by a single staffer. JLL reports AI tenants are now leasing offices 60% larger than their current head counts require.
Founders say they need to secure prime downtown real estate in SoHo, Flatiron, and NoMad before competition heats up, and landlords still command standard 7- to 10-year lease terms despite low initial occupancy. Some cite client expectations—Fazeshift’s CEO said a customer asked about physical presence during due diligence. Others point to aggressive hiring plans or the demands of “9-9-6” culture, which makes quality workspace a retention tool. AI health startup Adonis took 25,000 square feet at 3 World Trade Center with 25 employees and now houses 50-60 of its 85 staffers daily, validating the grow-into-it thesis.
Manhattan landlords are performing venture-style due diligence on AI tenants, reviewing balance sheets, capital raises, and revenue projections before signing deals—a response to dot-com-era defaults that left hundreds of spaces vacant in the early 2000s. Office owners downtown are betting funded startups will scale into their spaces as growth materializes, a wager buoyed by examples like Adonis. The leasing surge concentrates in neighborhoods where tech and venture capital activity cluster, creating localized demand that contrasts with broader Manhattan office vacancy rates. Landlords maintain pricing power in these micro-markets even as tenants sign for space they won’t fill for years.
The Wall Street Journal
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