AI firms and flexible office operators drive global demand for prime office space

Global demand for prime office space is showing further signs of growth, with almost six in ten of the largest leasing deals in the first half of 2026 involving organisations expanding their footprints, according to new research from Savills. The property consultancy says expansionary deals accounted for 58 percent of activity among the largest prime office transactions it analysed. Just 5 percent involved organisations reducing their space, while the proportion of occupiers relocating or renewing with broadly the same footprint fell from 44 percent in the second half of 2025 to 37 percent in the first six months of this year.

The findings add to evidence that demand for high-quality offices is becoming increasingly detached from the wider office market, as organisations focus investment on better buildings and locations rather than simply reducing their overall property commitments.

Flexible workspace operators appear particularly bullish. Savills found that 78 percent of the largest deals involving flex providers were expansions. More than half of these involved operators taking additional space in markets where they already had a presence, suggesting they are seeking to deepen their positions in selected cities rather than pursuing expansion indiscriminately.

AI businesses are also emerging as an increasingly important source of demand. They accounted for 17 percent of prime office deals involving technology companies during the first half of 2026, compared with just 3 percent two years earlier. Every AI company transaction identified by Savills during the period involved an expansion.

Demand from the sector remains concentrated around established technology and innovation clusters, led by San Francisco, although Savills also reports significant activity in Seattle and London’s West End.

Sarah Brooks, associate director at Savills World Research, said the growing influence of AI and technology occupiers had been “unmistakable” during the first half of the year. She said businesses in markets including San Francisco, London and Shenzhen were making substantial long-term investments in flagship workplaces as they competed for talent and sought space that supported client engagement and their brands.

The renewed competition for the best offices is also feeding through into occupancy costs. Savills’ separate Prime Office Costs research found that net all-in costs, incorporating rent and fit-out, increased by 1 percent globally during the second quarter and were 5.3 percent higher than a year earlier.

The regional picture varied considerably. Costs rose by 2.1 percent during the quarter in North America, compared with 0.5 percent in both EMEA and Asia Pacific. San Francisco recorded a particularly sharp quarterly increase of 7.7 percent, followed by Downtown New York at 5.6 percent, Washington DC at 4 percent, Seoul at 3.8 percent and Melbourne at 3.6 percent.

Rick Schuham, CEO of Global Occupier Services at Savills, said organisations continued to prioritise premium workplaces, concentrating demand on the best buildings in the most desirable locations and putting further upward pressure on costs. However, he said the trend was not universal. Some mainland Chinese markets are experiencing weaker demand alongside increased availability as new developments and refurbishments come onto the market, creating opportunities for occupiers to secure better-quality offices at more moderate costs.

Savills defines prime space as the upper tier of Grade A offices, typically commanding the highest 5–10 percent of rents in a market and characterised by modern facilities, strong sustainability credentials, advanced infrastructure and central locations.