Artificial intelligence could be the savior of the office building. Unlike many tech companies that are actively downsizing office space and waffling on RTO timing and policies, AI companies are seeing the need for physical office space to do their suddenly desirable work. The real estate services firm JLL estimates that by the end of 2023, AI companies will occupy 17.2 million square feet of office space across the country.
To put that number in perspective, it’s equivalent to more than half of the amount of office space that’s been leased or subleased between July 2022 and June 2023, according to JLL’s latest U.S. Office Outlook report.
So while office growth is slow coming out of the pandemic, AI is one of the industries keeping commercial real estate afloat. That’s partly due to the way these companies work, according to Katy Redmond, co-lead of JLL’s integrated real estate portfolio services for the Americas. “An important part of this is these AI companies do have a lot of in-office work,” she says. “These are occupiers that are bringing workers into the office, they’re doing the development and collaboration work together.”
Redmond says these companies are opting for newer and flashier buildings in what industry experts call a “flight to quality.” Some are also bucking a trend among tech companies to downsize their office footprint, with JLL estimating that there are 10 AI companies currently in the process of taking on offices of more than 700,000 square feet, or about 15 floors in a large new office building. (By comparison, Facebook- and Instagram-parent company Meta recently had 2.2 million square feet of office space in New York City.) “In terms of look and feel, it’s going to be cutting edge, it’s going to be exciting, it’s going to reflect the brand,” she says.
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