Artificial intelligence companies are fueling a surge in Manhattan office leasing that has put New York City's office market on track for its strongest year in a quarter-century, according to new industry data.

AI firms leased approximately 1 million square feet of Manhattan office space during the first quarter of 2026 alone, exceeding the total amount leased by the sector during all of 2025, according to a report from commercial real estate services firm Cushman & Wakefield. AI companies accounted for 56% of all technology-sector leasing activity in Manhattan during the quarter, more than double their share from the previous year.

The rapid expansion is drawing comparisons to the dot-com boom that transformed New York's office market in the late 1990s before collapsing in the early 2000s.

"The similarities with the frothy dot-com era are hard to ignore," the Cushman & Wakefield report said.

During the first quarter of 2000, dot-com companies represented roughly one-quarter of all leasing activity in Manhattan, helping drive one of the hottest office markets in the city's history. Industry analysts say AI companies are now playing a similar role as investors pour billions of dollars into artificial intelligence development and deployment.

Unlike many internet startups during the dot-com era, however, several leading AI firms already generate substantial revenue and serve major corporate clients. Real estate executives also say landlords have become more selective after experiencing previous technology-sector booms and busts.

"Landlords have learned to ask the right question," Melanie O'Brien, JLL's executive director of New York research, told The Wall Street Journal in an interview.

The growth is reshaping several Manhattan neighborhoods. OpenAI's office at the historic Puck Building has helped establish SoHo as a growing center for AI startups, while Anthropic is reportedly close to finalizing a lease for approximately 500,000 square feet in nearby Hudson Square.

Harvey, an AI startup focused on legal services, is expanding into 185,000 square feet at One Madison Avenue, more than doubling its existing footprint in the building. The company has experienced rapid growth since signing its first Manhattan lease in 2024, expanding from 36 New York-based employees to more than 300.

"The 'we're going to need a bigger boat' situation emerged," Harvey Chief Operating Officer Katie Burke said.

Industry leaders say AI companies' preference for in-person collaboration is contributing to strong demand for office space despite broader concerns about remote work.

"New York is such a hot spot right now for startups," said Blossom founder and CEO John Zhao.

The AI-driven leasing surge is helping power a broader recovery in Manhattan's office market. Leasing activity reached more than 10 million square feet during the first quarter of 2026, while office availability rates continued to decline as companies expanded and renewed leases. Analysts say that if current demand continues, Manhattan could record its highest annual leasing volume since 2000.

Some economists and real estate executives have warned that AI could eventually reduce demand for office space if the technology automates large numbers of white-collar jobs. Others argue that AI will create new industries and employment opportunities that offset any losses.

"I think also there will be jobs created in other sectors that we don't even know about yet," said Robert Sammons of Cushman & Wakefield.