Tech tenants are expanding their office presence. That’s one of the key takeaways from a Newmark report on leasing in the sector, which found that the average deal size within the largest tech leases rose 33% year-over-year to 165,000 square feet, driven by expanding footprints of AI and AI-adjacent firms. The average term for new leases was 120 months.
At the same time, the largest tenants are leasing in fewer markets. The 100 largest tech leases in the U.S. were signed across 14 markets, down from 21 in the prior period. Activity was heavily concentrated in the San Francisco Bay Area and New York City. Within the Bay Area, Silicon Valley unseated San Francisco for the largest share of tech leases. Additionally, the largest share of leasing activity remains in the hands of just 10 tenants.
“Despite macroeconomic and geopolitical headwinds and a tight pipeline of new supply, these top-tier commitments reflect deliberate, large-scale real-estate strategies,” wrote Newmark’s Jessica Morin and Keith Reichert. “Tech firms are concentrating in major talent hubs, prioritizing higher-quality workspaces and, in most cases, expanding their footprints. The pattern suggests that even amid uncertainty, the sector views physical presence as a tool for talent acquisition, collaboration and long-term growth.”
Pictured: 350-380 Ellis Ave. in Mountain View, CA, where OpenAI leased 450,000 square feet in March.
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