Despite predictions of job losses from automation, artificial intelligence companies are hiring at a rapid pace, driving an unexpected recovery in Silicon Valley's commercial real estate market. These firms are leasing millions of square feet of office space to accommodate their growing human workforces, reversing the remote-work trend that left many buildings vacant.
According to data from commercial real estate firm Colliers, leasing activity by AI and AI-infrastructure companies in Silicon Valley has surged. In 2025 alone, these companies have already leased more office space than in the entire previous year, signaling a significant shift in workplace strategy and a strong demand for physical offices in the tech hub.
Key Takeaways
- Artificial intelligence companies are leading a significant recovery in Silicon Valley's office real estate market.
- The trend is driven by extensive hiring of human employees, contradicting some predictions of AI-driven job losses.
- Since 2020, AI firms have leased 5.2 million square feet of office space in the region.
- Leasing volume in 2025 has already surpassed the total for all of 2024, which was 1.3 million square feet.
- The average size of office leases in Silicon Valley is now at its highest point since 2020.
A Contradiction in the AI Narrative
For several years, some executives in the technology sector have forecasted that generative AI would automate a wide range of jobs, leading to significant workforce reductions. However, the actions of these same companies tell a different story. Instead of shrinking their staff, many AI firms are in the midst of a hiring frenzy.
This expansion of human capital is creating a direct need for more physical workspace. The result is a revitalization of a commercial real estate market that was severely impacted by the pandemic-induced shift to remote work. Vacancy rates that soared just a few years ago are now declining as AI companies sign major leases.
Eric Simons, the CEO of AI startup StackBlitz, recently exemplified this trend by announcing a new office lease in San Francisco's prominent Levi's Plaza. The company is currently building out the space, with employees expected to move in by early next year. This move represents a broader pattern of AI companies investing in centralized, physical locations for their growing teams.
The Post-Pandemic Real Estate Shift
During the global pandemic, tech offices across Silicon Valley and other major hubs emptied as companies embraced remote work. This led to a historic downturn in the commercial real estate sector, with record-high vacancy rates and falling property values. The current AI-driven leasing boom marks a significant reversal of this trend, suggesting a renewed importance for in-person collaboration, at least within this specific industry.
Data Shows a Clear Leasing Trend
The recovery is not based on anecdotal evidence alone. Hard data from commercial real estate services firm Colliers confirms the significant impact of the AI industry on the U.S. office market, particularly in its traditional heartland.
Researchers at the firm have directly linked the increase in office demand to hiring. In a recent statement, they noted, "AI companies are leasing because they're hiring." This simple observation underscores the direct relationship between job creation in the AI sector and the demand for physical office space.
Silicon Valley Leasing by the Numbers
- Total Leased Space: 5.2 million square feet by AI companies since 2020 (excluding major tech giants like Apple, Alphabet, and Meta).
- 2024 Total: 1.3 million square feet.
- 2025 Progress: Leasing in 2025 has already exceeded the full-year total for 2024.
- Average Lease Size: The average size of office leases in Silicon Valley has reached its highest level since 2020.
The Colliers report highlights that this growth has been consistent over the past three years. The increasing average lease size suggests that companies are not just signing new leases, but are committing to larger footprints to accommodate future growth. This confidence in sustained hiring is a strong indicator of the industry's health and its long-term plans.
Geographic Hotspots and Industry Specialization
The leasing activity is concentrated in specific areas within Silicon Valley, reflecting the different needs of various sub-sectors of the AI industry.
Sunnyvale and Fremont Emerge as Hubs
According to Colliers, Sunnyvale, California, has become a popular location for what are described as "pure AI companies." These are often firms focused on software, models, and AI research.
Meanwhile, Fremont, California, is attracting significant interest from AI-infrastructure companies. This area is known for its advanced manufacturing capabilities, making it an ideal location for firms involved in building the physical hardware that powers artificial intelligence, including servers, chips, and robotics.
Many of the new companies moving into these areas specialize in robotics, an industry that requires substantial physical space for research, development, and testing. This specialization further fuels the demand for large, versatile commercial properties.
Rethinking the Future of Work and AI
The boom in office leasing by AI companies presents a compelling counter-narrative to the idea of an imminent "AI job apocalypse." While generative AI is certainly capable of automating tasks, its development and implementation are also creating a substantial number of new roles for humans.
"Generative AI is reshaping the workforce, but it's also fueling new job creation that drives office demand," Colliers researchers stated, summarizing the dynamic at play.
The very companies at the forefront of automation are demonstrating a strong need for a human workforce. These are not just roles for engineers and data scientists; the expansion requires staff in operations, sales, marketing, and management. If the creators of AI are hiring humans on a massive scale, it suggests that other industries adopting the technology may follow a similar pattern.
This trend indicates that the integration of AI into the economy may be more nuanced than simple job replacement. It could lead to a shift in the types of jobs available, with a premium placed on skills related to implementing, managing, and innovating with AI tools. The physical clustering of these jobs in office parks across Silicon Valley suggests that, for now, innovation in this sector still thrives on in-person collaboration.