Artificial intelligence companies have become a major driving force in the U.S. office market recovery, leading to increased leasing activity and higher occupancy rates since before the pandemic. Unlike previous tech firms, many AI companies prefer physical offices due to their need for collaboration, specialized infrastructure, and rapid hiring.

 

San Francisco has seen a surge in AI leasing, surpassing other major markets. As AI firms expand, they typically start with smaller spaces and quickly scale up. This trend is influencing vacancy rates nationwide, with cities experiencing renewed leasing activity.

 

Several notable deals highlight AI companies' commitment to office space, such as Nvidia's expansion in San Francisco, Databricks leasing a large building in Sunnyvale, and OpenAI establishing a presence in Bellevue, Washington. Harvey AI has also expanded its footprint in New York City and San Francisco, while Anthropic is in talks to lease a full office tower in San Francisco. The willingness of AI firms to secure large, long-term office spaces indicates confidence in sustained growth and the importance of in-person collaboration for technology development as 2026 approaches.

The U.S. office market in 2025 is beginning to stabilize, characterized by historically low construction activity, modest price increases, and ongoing growth in coworking spaces, as highlighted in Yardi Matrix’s December Office Report. The office construction pipeline has significantly decreased, with just over 13 million square feet started through November, indicating a restrained development approach. Currently, 32.2 million square feet of office space is under construction, marking a 44% decline compared to the previous year. Vacancy rates have slightly decreased to 18.5%, but physical occupancy remains stagnant due to limited growth in office-using employment and ongoing recession concerns. Notably, Manhattan exhibits low vacancy rates and a growing supply pipeline, while San Francisco has experienced increased demand.

President Donald Trump has postponed steep tariff increases on imported upholstered furniture, kitchen cabinets, and vanities for one year, originally set to take effect on January 1, 2026. This decision highlights the ongoing volatility in U.S. trade policy amid inflation and supply chain disruptions. The existing 25 percent tariff will remain in place, delaying hikes to 30 percent for upholstered furniture and 50 percent for kitchen cabinets and vanities. Trump's administration argues that tariffs help address trade imbalances and support domestic manufacturing, despite concerns from businesses about rising costs and potential job losses. The delayed tariffs will now take effect no earlier than January 2027, offering temporary relief while the U.S. Supreme Court reviews Trump's tariff authority.

The San Francisco CBD office market is experiencing a resurgence, driven by increased tenant demand and investment activity, particularly from AI companies. In 2025, AI leasing reached 2.5 million square feet, accounting for 25% of total leased space. Vacancy rates dropped to 33.5%, the largest decline since 2011. Despite high vacancy numbers, there is significant demand for high-quality office spaces, with tenants seeking a record 8 million square feet. The city's recovery is supported by positive political leadership and a more balanced market, fostering renewed investment across various sectors. Projects like The Spear aim to create vibrant urban environments, emphasizing community and cultural engagement beyond traditional business hours.

Seattle's office market is experiencing a record-high vacancy rate of 33.4%, marking a 3.3% increase year-over-year. However, the vacancy appears to be stabilizing, with a minimal quarter-over-quarter increase of just 10 basis points. There are currently no general office buildings under construction, leading to expectations of the first decline in vacancy since 2020. Leasing activity is on the rise, particularly for larger spaces, with popular submarkets including Seattle CBD, Lake Union, and Ballard/U District. Despite promising signs, Class A rents have dropped by 2% year-over-year, and net absorption remains negative at -9,500 square feet, though this is an improvement from previous months. Landlords are hopeful for a stronger first quarter ahead.

Copper prices surged over 30% in 2025, reaching over $12,000 per metric ton, driven by tariffs on finished copper products and supply disruptions. The U.S. construction industry faces heightened costs as tariffs impose steep duties on semifinished copper items, complicating procurement strategies. Analysts warn that demand from sectors like data centers and renewables may soon exceed mined supply, indicating a structural shift in copper pricing that could keep construction costs elevated.

Stephanie Forsythe and Todd MacAllen, co-founders of molo, have been pioneers in flexible architecture since their time in architecture school. They established their studio in Vancouver in 2000 and launched molo in 2004 to blend art, design, architecture, and technology. Over the years, they have focused on creating sustainable, adaptable spaces using elements like light, texture, and color to influence atmosphere. Their products, such as the softwall and cloud softlight, are designed to enhance the sensory experience of spaces, providing both aesthetic and acoustic benefits. By manipulating colors and materials, they aim to evoke emotions and create unique environments that support well-being and interaction.

A new workspace designed for mothers and children emphasizes community, flexibility, and inclusivity. It features interconnected areas for work and play, wellness amenities, and varied spaces catering to different needs. The design challenges traditional workplace norms by accommodating the realities of parenthood and promoting a supportive environment for diverse users, ultimately advocating for spaces that prioritize empathy and community over mere efficiency.

Workplace design is shifting to prioritize the needs and values of Gen Z, emphasizing comfort, wellness, and visually engaging environments. This generation demands high air quality, intuitive technology, and inclusivity in spaces, viewing wellness as essential. Sustainability is also crucial, with expectations for responsible material choices. Leadership must adapt to these changes, using design to empower employees and foster a collaborative culture that enhances overall well-being and productivity.

Silicon Valley is adapting to the return of employees, particularly Gen Z, by experimenting with unconventional office practices like shoeless environments. This trend includes tech companies encouraging employees to remove their shoes to enhance comfort, reminiscent of remote work. However, some startups are also offering nicotine pouches to boost productivity, reflecting a more controversial approach to employee satisfaction. The corporate world struggles to understand and meet the expectations of Gen Z, who often prioritize work-life balance and respect over traditional workplace norms. In response, some companies are even sending Gen Z employees to etiquette classes to bridge perceived gaps in social skills, a reaction to the unique challenges posed by the pandemic on their socialization. Overall, these efforts highlight the widening cultural divide between younger workers and traditional corporate expectations.

Canadian provinces are rolling back remote work policies, with Ontario mandating full-time office work starting January 5, 2026, and Alberta following in February. While some provinces maintain hybrid arrangements, public sector unions criticize the shift, emphasizing the need for flexibility. The federal government plans to increase office attendance but has not set a timeline. Major private sector employers are also tightening their in-office requirements. Cities are monitoring the impact on downtown economies as foot traffic remains a concern.

Office buildings are increasingly incorporating shared flexible workspaces, such as lounges and collaboration zones, which function similarly to traditional amenities but are not yet recognized in financial models. These spaces enhance tenant experience and productivity, aligning with evolving tenant demands for collaboration and social interaction. Incorporating these shared components into the load factor calculation could improve leasing outcomes and asset performance, yet market hesitation persists due to classification challenges within existing capital frameworks.

The rise of flexible workspace usage in the U.S. has led to discussions regarding the tax implications of coworking expenses. While traditional office leases are straightforward for tax deductions, coworking blurs the lines, making it more complex. Coworking memberships can be deductible if used primarily for business, but solopreneurs face stricter rules. The IRS scrutinizes dual-use spaces and personal versus business claims, particularly in luxury coworking environments. Documentation of purpose, separation of costs, and alignment of behavior with tax filings are essential for justifying deductions. As coworking evolves, it is seen as a legitimate business expense when used intentionally rather than a mere tax shelter.

Workplace design in 2026 is shifting from corporate branding to a focus on character, craft, and purpose. The emphasis is on creating spaces that reflect both company and employee values, moving away from sterile environments to more personalized, engaging designs. Architectural details, thoughtful accessories, and art programs are becoming essential, promoting authentic connections and enhancing employee experience. These designs not only improve aesthetics but also drive organizational outcomes like higher engagement and productivity. The integration of local culture and individual stories into the workplace fosters a sense of belonging and pride among employees, transforming workspaces into meaningful environments.

Organizations are rethinking the physical office as a hub for collaboration and community, inspired by urban planning principles. The "Main Street" concept creates a central corridor that fosters connectivity and accommodates various work styles, enhancing employee well-being and engagement. This design promotes spontaneous interactions and inclusivity, while also serving as a cultural landmark that reflects the organization's identity. The future workplace will prioritize environments that support meaningful connections and experiences for employees.

Modern workplace design often prioritizes standardization, leading to sterile environments that lack a sense of place and connection. This trend contributes to feelings of loneliness and social disconnection, necessitating a shift towards design localization, which emphasizes human connection and community. A case study of a coworking brand illustrates how tailoring design to local culture, needs, and history can create spaces that foster belonging and serve as community assets. Key strategies include engaging local artists, prioritizing local materials, and creating environments that reflect the unique stories of their locations.

Creating a welcoming and memorable workplace involves incorporating handcrafted pieces and curated art that reflect the identity and values of the company. This approach transcends simple aesthetics, focusing on emotional connections and storytelling. For example, The Beam in Tempe uses local art to create a vibrant lobby space that encourages social interaction, while True Food Kitchen showcases artifacts that resonate with its ethos of authenticity and local sourcing. Offerpad's headquarters embodies warmth and eccentricity, using personal photographs and thrifted items to create a home-like atmosphere. The emphasis is on designing spaces that feel alive and personal, establishing a strong relationship between the environment and its occupants.

Half of UK organizations still send unwanted office furniture to landfill, despite claiming sustainable practices. A report reveals a disconnect between intent and action, with 300 tonnes of furniture discarded daily. Smaller companies often lack formal strategies, prioritizing cost over sustainability. Many stored items could be reused, indicating missed opportunities. There is strong support for sustainable practices, with recommendations for audits, clearer procurement policies, and a focus on reuse and donation to reduce waste and costs.

DEDON has expanded its MU and CIRQL NU collections with new colorways inspired by the transition from sunset to evening. The new hues enhance the brand’s material and tonal range for outdoor living. To commemorate the 15th anniversary of the MU collection, Toan Nguyen’s modular lounge system now includes a new material called Mystique Fiber, which features a subtle three-dimensional effect with contrasting tones. The debut colorway, Mystique Dusk, adds depth while maintaining the architectural presence of MU. Additionally, Werner Aisslinger’s CIRQL NU collection incorporates DEDON’s Invert Fiber technology, introducing two new options: Invert Twilight, a light tan and white weave, and Invert Nightfall, a sophisticated black and white, both enhancing the collection's visual depth and atmosphere.

Berlin Acoustics, founded in 2022, aims to address the shortcomings of open-plan offices by focusing on creating spaces that enhance concentration. The company offers minimalist acoustic booths that blend into their surroundings without adding visual clutter. Their design philosophy prioritizes timelessness over trends, ensuring quality and affordability. Sustainability is integral to their operations, with over 90% of materials sourced locally in Germany, and all production occurring in domestic facilities. This approach not only enhances quality control but also supports environmental initiatives like replanting trees through their "One Booth – One Tree" program. As working models evolve, the demand for flexible, multi-use solutions like acoustic booths grows, positioning them as essential elements in modern workplaces.

Gollinucci Daniele has been a leader in ergonomic chair design and manufacturing since 1976, initially focusing on assembling and upholstering commercial products. Under Daniele Gollinucci's management since 1989, the company has combined aesthetic appeal with technical innovation and environmental responsibility. The launch of the YOUNIQUE chair, which won the "Best of NeoCon" award in 2019, marked a significant milestone, leading to a partnership for exclusive distribution with Haworth. The company’s latest innovation, the RESHAPE chair, features a hybrid synchronized mechanism, tool-free assembly, and fully removable washable covers, all designed with eco-friendly materials. Gollinucci Daniele remains committed to blending design excellence with sustainability.

NII, a new furniture brand by ITOKI Corporation, aims to redefine the workplace with modular designs like the BITMAP sofa by Todd Bracher, which promotes collaboration and comfort. The brand emphasizes "ingenious design" to enhance communication and creativity in office spaces, moving away from traditional, rigid environments. Other products include CONNEXA, PIGNA, and PARLAMENTO, each offering unique functionalities that cater to modern work needs and foster a positive workplace culture.

AI is transforming design by accelerating ideation and iteration, allowing for faster concept generation and greater creative exploration. While AI excels in generating diverse ideas, human judgment remains crucial during the refinement phase. The technology can enable personalized product design but raises questions about overconsumption and the values embedded in AI tools. Ultimately, the success of AI in design will depend on how well it enhances human creativity rather than replacing it.

Tabula Studio has designed a vibrant office in Bilbao, featuring bold red floors and an eclectic mix of colors and materials. The space serves as both a workspace and a showroom, showcasing local brands. High ceilings and large windows enhance the environment, while the design reflects a playful and functional approach. Key features include a unique meeting room, a kitchen that displays various products, and bathrooms that highlight different surface materials. The overall aim is to create a joyful and immersive atmosphere for both employees and visitors.

DLR Group's Dallas studio, designed as a 12,000-square-foot space in Deep Ellum, emphasizes adaptability and employee input, fostering collaboration and creativity. The design features raw materials, custom lighting, and a makerspace that honors local heritage. Technology solutions enhance flexibility, while post-occupancy surveys indicate 100% employee satisfaction, showcasing the success of an inclusive and adaptive workplace design approach.

Luboš Volkov is a designer with over 15 years of experience, known for his strategic design work with notable brands. He balances his professional life with personal roles as a father and fitness enthusiast, which influence his design philosophy. His workspace features high-end Apple products and is continuously evolving to reflect his personality. He emphasizes productivity gained from parenthood and maintains a structured morning routine that includes exercise and planning.

Moody's is relocating its global headquarters to a 460,000 square foot space at Brookfield Place in Lower Manhattan, moving from the World Trade Center after 20 years. The new office is set to open in 2027 and represents a significant downsizing from its current space. This move is part of a broader global restructuring that includes new offices in various cities worldwide. The lease is one of the largest signed in 2025 and highlights Brookfield's success in attracting major tenants.

High turnover of CEOs in companies acquired by private equity (PE) affects productivity and sales, as new leadership often lacks industry understanding. While PE optimizes for financial metrics, it can alienate existing staff and disrupt established relationships. Effective leadership should balance fresh ideas with industry sensibilities, and sometimes turnover is a strategic choice. Employees are encouraged to adapt to new leadership or seek other opportunities, as PE's presence in the industry is likely to continue.