AI Tenant Demand Drives Manhattan Toward Strongest Leasing Year in Two Decades
Manhattan is on track for its strongest office leasing year since 2000, driven by artificial intelligence companies that leased 1 million square feet in the first quarter alone. That volume exceeded all AI leasing in 2024. AI firms captured 56% of tech-sector leasing in the first quarter, more than double their 2024 share, according to Cushman & Wakefield. OpenAI’s presence at the Puck Building has turned SoHo into an AI hub, while Anthropic is nearing a deal for 500,000 square feet at Hudson Square. Despite this growth, AI companies still represent only 2% of Manhattan’s total office leasing in 2024, though the figure is climbing in 2025.
EliseAI signed for 109,000 square feet near Grand Central Terminal, while legal AI startup Harvey is taking 185,000 square feet overlooking Madison Square Park, more than doubling its footprint. Healthcare AI company Adonis leased 25,000 square feet at 3 World Trade Center with 25 employees and has since tripled its head count to 85. Most AI deals remain small; JLL found 40 of 51 AI leases signed in Manhattan last year were under 25,000 square feet. Many firms are committing to five-year or longer terms, favoring Midtown South and Silicon Alley neighborhoods, though expansion is spreading to downtown and broader midtown areas.
Landlords are scrutinizing AI tenants more carefully than they did during the dot-com era, demanding proof of revenue growth and viable business plans after being burned by the late-1990s bust. Unlike many internet startups of that period, several leading AI companies already generate substantial revenue and serve large corporate clients. AI firms are prioritizing in-office work, believing innovation accelerates when engineers and researchers collaborate in person on sensitive projects. Many startups report employees working five days a week, often into the evening.
San Francisco leads in AI leasing concentration, with the sector accounting for 58% of first-quarter activity, including Anthropic’s 400,000-square-foot deal, according to CBRE. But New York’s AI ecosystem remains nascent compared to the dot-com era, when internet companies captured a quarter of all Manhattan leasing in the first quarter of 2000 and briefly surpassed financial services as the city’s largest office tenant category. A CoStar survey found 35% of office-market participants expect AI adoption to slightly depress office demand, up from 23% six months earlier, though some anticipate job creation in sectors not yet visible.
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