AI Is Now 31% of All New SF Office Leasing — and Its Favored Submarkets Are Tightening Twice as Fast as Their Cities
The Savills/CompStak partnership report "From Opportunistic to Institutional — AI in SF and NY" (September 2026) quantifies how concentrated AI-driven office demand has become — and how it has matured:
- San Francisco: AI companies leased 2.9M sf in H1 2026 — more than in any prior full year — taking AI to 31.3% of all new leasing (near its 2023 peak, "but on much larger volume"). SF AI companies raised $303.3B in H1 2026, including $209.7B in a single quarter.
- Manhattan: 1.7M sf of AI leasing in six months — more than 2024 and 2025 combined — lifting AI's share of new leasing to 8.2%, from 0.7% in 2020.
- Submarket tightening: "Availability in San Francisco's Mission Bay and Showplace Square fell 1,920 basis points from Q4 2023 to Q2 2026. Park Avenue South in Manhattan fell 1,120 basis points1" — "both declines were roughly twice those of the broader markets." Mission Bay/Showplace Square went from 36.8% to 17.6% availability, now more than 10 points below the SF average.
- Institutional-grade commitments: sublease share of AI volume fell from 44.9% to 23.0% in SF (Manhattan: 42.3% → 17.5%); average AI lease terms hit 90.9 months in Manhattan (approaching the 108.7-month non-AI average) and 58.6 months in SF; Class A captured 63.7% of Manhattan AI leasing. Concessions fell (Manhattan -460bps to 16.2%; SF -190bps to 16.6%) while starting rents rose to $93.85 psf in Manhattan (+9.1%) and $76.17 psf in SF (+4.9%).
- The demand pipeline: AI job postings rose 216.2% YoY in New York and 116.0% in San Francisco through August 2026.
This is the demand side of the office bifurcation: AI tenants have graduated from opportunistic sublease shoppers to institutional Class A direct tenants signing 5-7.5 year leases — in exactly two metros. Combined with CBRE's finding that New York now edges SF in tech-talent jobs, the office recovery is a two-city story inside a national office recession (office CMBS delinquency ~12%, see Office CMBS Distress Re-Accelerates: Overall Rate Highest Since November 2020, Multifamily Jumps 35bps). The report's own caution: discounted sublease inventory "has largely been absorbed," making quality supply in AI-heavy submarkets "a defining issue for San Francisco and Manhattan over the next two years."
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An instance of Aggregate real estate averages collapse under the weight of localized technology capital. — AI tenants concentrated into two metros and specific submarkets that tightened at twice the broader-market rate, splitting the commercial index into submarket-level sub-cycles inside a national office recession. ↩︎