Earlier this month, the artificial intelligence company Altana signed a lease for 62,000 square feet of office space in Midtown, tripling its current Williamsburg office space. Weeks earlier, another AI company, Sierra, signed a lease for a 94,000 square foot space on East 26th Street, not long after AI video company Synthesia closed on 50,000 square feet of space in the Flatiron District.
The companies are part of a surge of AI companies taking over prime real estate in Manhattan, a trend that analysts said was only likely to grow. In the first quarter of 2026, AI firms took out 1 million square feet of New York City office space – by comparison, the Chrysler Building holds 1.2 million square feet of office space – already exceeding the total leased in 2025, said Reed Hatcher, a senior manager at Cushman & Wakefield’s research arm.
“It's gone from a niche trend to a real demand driver,” said Hatcher.
Real estate analysts and experts who study AI said New York City is quickly consolidating its role as one of the three centers of global AI activity, behind the San Francisco Bay Area and ahead of London, with consulting firm PWC estimating the technology could generate $15.7 trillion in economic activity by 2030.
The scramble for AI space in Manhattan is injecting fresh investment into the city’s real estate market, analysts said, particularly in the Midtown core, where the pandemic and a now-receding work-from-home push helped drive up office building vacancies.
The recent growth, while also heralding a boost in high-paying jobs and new revenues for city coffers, also comes in the wake of concerns raised in a May report by city Comptroller Mark Levine, who said the AI push could mean economic growth for the city but also carries substantial risks, including that the boom could quickly go bust.
New York City, at least for the time being, serves as an attractive base for AI firms in part because of its large pool of talent, according to experts who study the industry. The city additionally benefits from a supply of AI research labs, including ones operated by Google, Columbia University, CornellTech and JPMorgan, according to a May report by JLL, a global real estate services company headquartered in Chicago. The company estimated that nearly 1,100 AI start-ups operate in New York City, compared to 2,655 in the Bay Area, and that the median advertised salary is $155,000 here.
By Cushman’s estimate, more than 1,500 AI companies are located in the city. These include Harvey AI and Palantir, which lease 219,000 square feet and 206,000 square feet, respectively, making them the largest occupiers of office space in the city, according to Cushman.
Melanie O’Brien, JLL’s executive director of tristate research, said the technology was luring a wave of new workers to the city, because their skills in the emerging AI-driven landscape would provide them with a variety of career options.
“Someone who has highly specialized skills loves to come to New York because they could be employed by one of these AI companies, but they also could be head-hunted by a big financial services firm,” O’Brien said.
Suhail Y. Tayeb, a professor at NYU’s Schack Institute of Real Estate, said New York is a popular location for AI companies because it “sits at the intersection of talent, universities, capital, and customers.” One of the city’s primary assets, Tayeb said, is that it’s home to many of the world’s largest buyers of AI products.
“For instance, if you're building legal AI or financial AI or advertising or even real estate, being closer to those people who are actually going to use your product still has significant value,” he said.
Another factor is marketing, said Anuli Akanegbu, a cultural anthropologist based in Atlanta who works with the nonprofit research group Data and Society. She said for many tech companies setting up shop in New York City, “ a big draw is the proximity to the media industry for brand-building purposes” and media coverage.
Ninety percent of the leasing activity by AI firms in the city over the last year has involved new leases, said Hatcher of Cushman & Wakefield, as opposed to renewals.
“That's new demand coming into the market,” he said.
Midtown South, particularly the cluster of Madison Square, Flatiron and Union Square, is among the neighborhoods seeing the most activity, Hatcher said, along with the World Trade Center area and Chelsea.
The Flatiron NoMad Partnership, a business improvement district in Manhattan, said leasing in the area reached 3.8 million square feet last year, up 15% over 2024, with AI, tech and other high-growth firms driving demand. Most firms signing new leases are looking for 10,000 to 20,000 square foot spaces that allow them to have access to talent and proximity to capital, a spokesperson for the group said.
Along with the growth, however, some real estate analysts are bracing for a contraction as more employers embrace AI.
“If AI makes workers more productive, companies hire fewer people,” said Victor Rodriguez, senior director of market analytics at the CoStar group, which analyzes commercial real estate data. “Fewer people means less need for more space. That math is what has people paying attention.”
Levine, the city comptroller, said in a May briefing with reporters that economists and technologists weren’t of a single mind on how AI would affect the city. The most likely scenario envisioned by his office, the rise of an AI-powered economy, foresaw “a moderate growth path” for the city, with private-sector employment expanding by 52,000 jobs annually – or more than 260,000 jobs all told – over the next five years.
But he said under the second most-likely scenario, the AI boom would quickly collapse as
AI adoption rates, productivity gains and profits fall short of market expectations, resulting in a 35% stock market decline and the loss of 52,000 private-sector jobs in just one year.
The varying possibilities, he said, demanded that city leaders pay close attention to the technology and its effects.
“ I feel like we have a freight train coming down the tracks,” Levine said.
The technology's repercussions could eventually be felt across the five boroughs, said Tayeb, and exacerbate problems of affordability and housing costs.
“With these highly compensated workers, it's going to drive prices up, and it's going to make New York at some point unaffordable for some folks,” Tayeb said. “So policy really needs to consider these factors and start working on those things as well.”
Correction: An earlier version of this story misspelled the name of Suhail Y. Tayeb.
