We recently launched VTS AI, which among many things, provides customers with the most advanced CRE data and insights available. The analysis below is an example of the enhanced level of market intelligence that VTS AI provides our customers, delivering the most comprehensive view of commercial real estate.
A VTS Data analysis of August 2025 commercial office space requirements reveals that San Francisco and New York are experiencing a significant increase in demand, outpacing the national average, largely due to increased demand from growth in the AI sector and more specifically, those two markets dominating tech headcount growth among AI companies.
Overview
The incredible boom in the Artificial Intelligence (AI) space over the last twelve months has injected yet another dynamic component into the national office market, but particularly in the office markets of New York and San Francisco. Both cities are experiencing an AI-fueled tech expansion which has pushed them to outperform national office demand levels as tracked by the VTS Office Demand Index (VODI) over the past year and since November 2022, when ChatGPT was released to the public. Based on a report by Wing VC, which tracks the top tech start ups at various funding stages, these two markets alone account for 58% of the primary hiring locations as these AI firms go in search of talent.
Tech Growth in San Francisco v. New York
New York's tech ecosystem as part of its large diversified industry base has demonstrated resilient growth. The city's VODI saw a robust 39% year-over-year increase in August 2025, outpacing the national growth of 30% over the same time. This steady demand is reflective of a broader tech expansion as the share of Tech sector demand for office space reached its post-Covid peak in August 2025 of 18% - a key indicator of how much the tech industry now accounts for in New York, a market where FIRE and Professional Services dominate.
San Francisco's office market, which remains heavily influenced by its dense concentration of tech giants and AI startups, presents an even stronger picture. The city's VODI was up 107% year-over-year in August 2025, but is up 356% since ChatGPT’s release in late-2022. Additionally, similar to The Big Apple, San Francisco’s share of office demand derived from the Tech sector has only expanded even more after hitting a post-Covid record in August 2025 of 59% - beating out even the levels seen in the immediate Tech boom during the onset of the pandemic in 2020.
Conclusion
The surge in AI is reshaping the office landscape, with New York and San Francisco firmly positioned as the epicenters of this transformation. While New York showcases resilient growth within its diverse industry base, San Francisco presents an even more dramatic, tech-concentrated boom, with office demand skyrocketing since the public release of ChatGPT and the cascading demand for AI that was created. As these two markets command a leading share of primary hiring locations for top tech startups, and with tech's share of office demand hitting post-COVID records in both cities, their leadership is undeniable. Their performance not only significantly outpaces the national average but also solidifies their status as the premier hubs where the AI revolution is creating an immense appetite for commercial real estate.
For additional public VTS Data insights, visit our July 2025 VODI Report
To unlock additional VTS Data insights for your business, contact our Head of Research: maximilian.saia@vts.com
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