AI will boost office demand in tech hubs as long as the bubble lasts

We expect AI firms to drive office demand in key tech hubs as they expand and compete for top talent, although this exposure heightens the downside risk for the least diversified tech markets if we are right that the bubble will eventually burst. When that happens, New York City, London and Paris will at least benefit from the support of their diverse occupier bases. For now, though, the losers will be peripheral locations in all cities, as well as office markets with a high share of back office and outsourced functions as they see significant job downsides and little direct offset from AI expansion.