Could Chicago’s Offices Benefit From the AI Boom?

AI’s boom is transforming into a boon for office space in New York City and San Francisco. The increased demand for office space is set to have spillover into other markets, and tenant-hungry Chicago could be a beneficiary.

Building tours by AI companies looking for office space have spiked 85 percent this year, , according to Bloomberg, who cited commercial data provider VTS. Most were searching for office space in the traditional places: Silicon Valley, San Francisco and New York. Those areas aren’t going to stop being AI company strongholds, but the VTS data shows that Seattle, Washington and Chicago are seeing growth as well.

“We will 100 percent see spillover,” VTS chief strategy officer Ryan Masiello told the outlet.

As the pandemic scourge still afflicts office building markets and landlords, the AI surge is helping to salve the wound. The trend is following the general cadence of other tech booms, but more conservatively. While office space isn’t being acquired years in advance of anticipated hiring, San Francisco is seeing tangible growth in its markets, according to the publication. As the competition for premium space in the strongholds heats up among the burgeoning sector, office space markets in other areas are expected to swoop in and attract tenants.

Previous reporting in The Real Deal on the AI boom translating into filled desks in office buildings called the pace in NYC and San Francisco “frenetic,” and pointed out how quickly the deals come together for companies that need the space now, not hypothetically in six months.

With the time from tour to signing decreased and the sheer number of AI startups that are being created to piggyback off the tech submarket’s momentum, Chicago could see some vacancy relief in the future. Downtown Chicago is showing some small signs of turning its vacancy crisis around, and the city’s pivot towards trophy office space could entice the new money companies to the city.

— Hunter Cooke