On a Tuesday in late April, health tech platform Tennr signed a 125,733-square-foot sublease at 345 Hudson Street. The deal pushed Manhattan's AI-related office demand past the full-year 2025 total in just four months.
Tennr is not a household name. But its lease is a data point in a broader shift: Manhattan's technology sector signed 235 lease deals in 2025, shattering the previous record of 155 set in 2019, according to a new Colliers report. Total square footage hit 6.54 million, second only to 2019's 7.1 million.
The record transaction count tells a more important story than square footage alone. Deal velocity, not just volume, is accelerating. Frank Wallach, executive managing director at Colliers, told Commercial Observer that activity increased across almost every size category except the very largest.
That pattern continued into 2026. Tech leasing totaled 1.89 million square feet in Q1, surpassing last year's quarterly average. The artificial intelligence sector accounted for one-third of that demand, or 670,000 square feet, up from a 12.1 percent share in 2025.
AI tenants are not just signing leases. They are competing for space. Wallach noted that Manhattan currently has only 24 options available for tech companies needing footprints above 250,000 square feet within the next 12 months. Supply is tightening at the top of the market.
Concessions remain generous. In 2025, tech tenants received an average rental abatement of 13.3 months and tenant improvement allowances of $131.70 per square foot. Taking rents averaged $90.35 per square foot, just 0.1 percent below the 2019 peak. Landlords are spending heavily to lock in creditworthy tenants.
Midtown South captured two-thirds of tech office demand in 2025 and into 2026, per Colliers. Its stock of prewar buildings remains the preferred habitat for the sector. Midtown itself secured a record 1.18 million square feet of tech leases in 2025, driven by Amazon and Salesforce.
Lower Manhattan was more subdued in Q1 2026, per the Alliance For Downtown New York. Still, tech led new leasing there. AI security platform Adaptive Security took 51,220 square feet at Silverstein Properties' 120 Broadway. SHoP Architects signed the largest Lower Manhattan deal of 2025, a 56,196-square-foot renewal and expansion at the Woolworth Building.
The data reveals a structural shift, not a cyclical bounce. Tech tenants are signing more deals, not just bigger ones. That suggests a broadening base of demand, not concentration in a handful of mega-leases. The 80-transaction gap between 2025 and 2019 is evidence of depth.
AI is the accelerant. Its share of tech demand tripled in one year. If that trajectory holds, the constraint will not be tenant appetite but available space. Twenty-four options for 250,000-square-foot users is a thin pipeline. Landlords with shovel-ready blocks in Midtown South hold pricing power.
The concession math is worth watching. Thirteen months of free rent and $131 per square foot in improvements are aggressive. They reflect a market where landlords are trading near-term cash flow for long-term occupancy. If AI tenants prove durable, those bets pay off. If the sector consolidates, landlords carry the cost.
Manhattan's office market has found its demand driver. The question is whether supply can keep pace.