VTS counts 820 AI office requirements, up 27%, with demand concentrated in three markets

VTS counted 820 new AI office leasing requirements across the 17 markets it tracks over the past year, up 27% from 644, as Connect CRE reported. Where those requirements sit is a narrower question than how fast they grew, and the answer is stark: San Francisco, New York and Silicon Valley hold 64% of the 16.9 million square feet of active AI demand and 55 of the 83 requirements of 50,000 square feet or larger nationwide.

Large-block requirements are what fill large buildings, so the bulk of the national count landing in three markets is a number the landlords there can use and the rest of the country cannot. The 16.9 million square feet of active demand works out to roughly 10.8 million in those three markets, of which New York and Silicon Valley account for 5.57 million between them, leaving San Francisco a little over 5 million—the largest of the three by the arithmetic even though the ranking change VTS had to report came one rung down.

The margin holding New York in second place is 10,000 square feet, roughly 0.4% of either market's total, and it arrives with a change in large-requirement counts: New York now has 18 to Silicon Valley's 16. Two markets with nearly identical square footage but different tallies are pipelines of different shapes, and the arithmetic implies smaller average blocks in New York, a point VTS does not draw itself.

Below the top three the floor drops away. Austin ranks fourth at 1.25 million square feet, followed by Dallas-Fort Worth at 769,000, each less than half of New York's total; the square footage and large-requirement shares land close together, 64% of the square footage and 55 of the 83 large requirements, or two-thirds, which says the three leaders hold most of the AI demand at every size, not only at the top.

Growth rates further down the board run in both directions: the San Francisco East Bay is up 130%, Washington, DC up 94% and Northern Virginia up 50%, while Houston is down 54%, Atlanta and the Seattle Eastside each down 36%, and Denver off 16%. The geography offers no simple explanation for that split, since two of the three biggest percentage gainers sit next to a larger hub, the East Bay beside San Francisco and Northern Virginia beside Washington, but the Seattle Eastside is a satellite as well and it is shrinking. The percentages also come without the counts beneath them, which matters at these magnitudes, because a market adding a handful of requirements can post a triple-digit gain and a market losing one large tenant can post a double-digit decline.

Of the 17 markets tracked, 12 contributed to the increase; the five that did not include the four markets VTS reports as shrinking, so the count is growing in more places than the space is.

A requirement is a stated need for space, and the distance between one and a signed lease is what separates this data set from a leasing report. The count of 820 measures intent accumulated over the year, while the 16.9 million square feet measures active demand; neither is a completed transaction, and the coverage does not report how many requirements convert. Most of what is accumulating is also small, with 83 requirements clearing 50,000 square feet and 737 not, but the large ones carry weight out of proportion to their number, since each represents at least that threshold and the 55 in three markets put a floor of 2.75 million square feet beneath them.

For lenders and the owners behind the loans, the concentration is what matters: office owners outside those three markets are underwriting against a thinner set of AI tenants, and the data does not say whether the buildings these requirements target are the ones carrying the heaviest debt. What it establishes is where the bid is deepening and where it has pulled back, and both lists are short.

Set against the demand counts is a debt side that has supplied few named examples of trouble; this publication's read of Connect CRE's weekly rundown of loans returning to lenders in August found it naming no loans that week, but one week of one tracker is not a verdict on office credit, and the two ledgers measure different things, since a requirement is a stated intention while a loan coming back to its lender has already happened.

What VTS's next count settles is conversion, and the margin holding New York in second place, 10,000 square feet, the smallest number in the report, is the easiest to reverse, while the 737 requirements below the large-block line are where a 27% growth rate holds or does not. Until more of that demand turns into signed space, the AI tenant is a count of intentions, and the three markets holding it now will be the three holding the leases if the intentions clear.