Impact of AI on BXP Office Leasing in 2026: Market Trends and Insights

Impact of AI on BXP office leasing demand in key markets for 2026

Based on BXP’s Q1 2026 earnings discussion, AI is showing up less as a generic “job loss” story and more as an actual source of incremental office demand—especially in BXP’s premier workplace and gateway/tech-heavy submarkets—which is translating into measurable leasing momentum through 2026.

1) San Francisco / Silicon Valley gateway markets (BXP: strongest AI leasing link)

BXP explicitly ties AI to direct leasing activity in San Francisco, alongside New York and Seattle. Management states that AI has been “enormously beneficial” to BXP’s leasing activity, with direct benefits from leasing space to AI companies in San Francisco. ¹

BXP also provides a quantitative framing for the demand mix in San Francisco: AI/tech leasing has grown from 50% of total leasing demand in the market to 57% to nearly 80% in Q1 2026 (depending on the quarter-level measure being described). ² This indicates AI is not only participating in demand—it is becoming a dominant component of incremental leasing demand in the market.

Finally, BXP references broader office absorption supporting the leasing environment, including CBRE reporting 3.0 million square feet of positive office absorption in San Francisco over the last seven quarters, including an extraordinary 1.4 million square feet in 2026. ³ BXP states this backdrop is translating into tangible leasing activity, with total leasing volume of 1.14 million square feet in Q1. ³

Net effect for 2026 (San Francisco): AI is contributing a material share of leasing demand (rising toward “nearly 80%” at Q1 2026 levels), which supports BXP’s ability to lease vacant/expiring space and sustain occupancy gains. ²¹³

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2) New York (especially Midtown South and “AI-oriented” expansions)

BXP’s commentary highlights a shift in the composition of incremental demand in New York: it argues AI-driven technology demand is growing office usage in the city, with a focus on new organizations developing AI. Management states that in the current cycle there is “dramatic incremental office demand growth from new organizations that are developing AI,” focused in San Francisco and more recently in New York City. ³

Within New York, BXP provides a direct 2026 data point for Midtown South: 2026 captured as much AI demand in leasing as 2025 did, and BXP says AI demand from Midtown South is accelerating year over year. ⁴

BXP also gives evidence of AI tenant behavior in Midtown South leasing activity (in BXP-specific buildings): for example, at 360 Park Avenue South, management reports (i) leasing to an existing AI client to expand by an additional floor, taking the building to 95% leased. ²

Net effect for 2026 (New York): AI demand is persisting and accelerating in key submarkets—particularly Midtown South—contributing to leasing velocity and helping BXP achieve/maintain higher occupancy targets. ⁴²

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3) Seattle (AI companies as direct leasing beneficiaries)

BXP states that it is experiencing direct benefits by leasing space to AI companies in San Francisco, New York, and Seattle. ¹

While the excerpts don’t provide Seattle-specific leasing share percentages like they do for San Francisco, the management attribution is direct: AI is helping BXP lease space in Seattle as well. ¹

Net effect for 2026 (Seattle): AI tenants are supporting leasing demand directly in the market, reducing reliance on purely traditional demand drivers. ¹

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How this AI-driven demand connects to BXP’s 2026 leasing and occupancy performance

AI’s role is “direct” for premier workplaces; job-loss concerns are acknowledged but not observed in premier assets

BXP directly addresses the debate around AI harming job creation and thereby office demand. Management says there is market anxiety about AI’s impact on jobs, but BXP is “experiencing direct benefits” by leasing to AI companies and also benefits indirectly from companies displaced by AI firms plus AI-serving professional/financial/legal/business services clients. ¹

BXP also argues that the near- and medium-term negative impacts on jobs are more likely in support functions, which BXP implies are less present in premier workplaces and in gateway markets. ¹

In a broader market interpretation, BXP reinforces that it is seeing additional absorption of office space and growth in premier buildings, including significant growth of new organizations in markets like San Francisco and Midtown South. ⁵

Implication for 2026: AI demand supports absorption and leasing in BXP’s highest-quality segments, where BXP is positioned as a market leader. ¹⁵

Leasing activity and 2026 occupancy ramp are already in motion

BXP reports strong leasing execution early in 2026:

• Q1 total leasing volume: 1.14 million square feet. ³
• Leases executed on vacant space: 700,000 square feet. ⁶
• Renewed/backfilled 2026–2027 expirations: 235,000 square feet. ⁶
• In-service occupancy increased 70 bps to 87.4%, and BXP widened the spread between leased and occupied square footage to 3.5% (described as a precursor to more occupancy gains). ¹

For 2026 outcomes, BXP states confidence in occupancy improvement:

• BXP expects to end 2026 at 89% occupancy (hopefully a little higher). ⁷
• BXP states that the majority (if not all) of the occupancy it is working on today will be in place on 12/31/2026, implying a strong near-term run-rate for occupancy gains. ⁷
• BXP also targets ~4 percentage points of total occupancy improvement over 2026 and 2027. ⁸

Implication for “impact of AI on leasing demand in key markets for 2026”: AI-linked incremental demand (especially San Francisco and Midtown South) is consistent with BXP’s reported leasing volume, vacancy-to-occupied progress, and its expectation of achieving substantial 2026 occupancy gains. ²⁴⁶¹⁷

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Market-wise conclusion (for 2026)

• San Francisco: AI/tech tenants are a major driver of incremental leasing demand; AI/tech share reportedly rises to ~57% to nearly 80% in Q1 2026, alongside reported strong overall absorption in 2026. ²³
• New York (Midtown South especially): AI demand remains robust and is accelerating year over year in 2026, with BXP describing direct AI-client expansion leasing in Midtown South assets. ⁴²
• Seattle: BXP identifies direct AI leasing benefits in Seattle, though the excerpts don’t quantify Seattle’s AI share the way they do for San Francisco/Midtown South. ¹
• Overall occupancy outcome: BXP’s leasing performance (including leasing on vacant space and managing 2026 expirations) aligns with confidence in achieving ~89% occupancy by end of 2026, which is the operational manifestation of demand supporting leasing. ⁶⁷

All told, in BXP’s disclosed view, AI’s impact on office leasing demand in key markets for 2026 is positive and measurable, with the strongest evidence in San Francisco and Midtown South (New York). ²⁴¹