The Office Isn’t Dying — It’s Dividing

Every few years, a new narrative emerges about the death of the office. First it was remote work. Then hybrid. Now AI. And every time, the reality turns out to be more complicated — and more interesting — than the headline.

A new research report from Newmark offers the most data-driven look yet at what artificial intelligence will actually do to office demand through 2030. The conclusion isn’t collapse. It isn’t a boom either. It’s something more nuanced, and in some ways more consequential: a split. AI is reshaping which office space wins — not whether office space exists at all. Where you sit on that divide, as a tenant or an investor, will determine a lot about your outcomes over the next five years.

The Headline Number Isn’t the Whole Story

When a report projects national office vacancy climbing to 21.5% by 2030, that sounds bad. But context matters enormously here. Newmark’s base case has vacancy increasing just 170 basis points relative to the control — only 10 basis points above the Q4 2025 level. That’s a modest move, not a freefall. 

Newmark’s Base Case AI scenario forecasts office-using employment growth will be essentially flat at +0.3% over the 2026–2030 period. While this outcome is far from the “AI job apocalypse” portrayed in some headlines, it does represent a break from historical trends — office-using employment has rarely been flat or declined in any five-year period outside of the Great Recession. 

Alarming on the surface. But the broad numbers mask a more important underlying dynamic. AI is more likely to dampen overall office space utilization rather than trigger wholesale upheaval. The threat is selective, not sweeping. Brandon Charnas points out that reading past the top-line vacancy figure is exactly where sophisticated tenants and investors need to focus right now. The average tells you very little. The distribution tells you everything. 

Premium Space Is Pulling Away From the Pack

Here’s the dynamic that matters most coming out of this report. High-quality, collaboration-oriented office settings will be comparatively resilient, while commodity space will be more vulnerable. Two very different markets. One vacancy number.

The flight to quality that began in the wake of the pandemic isn’t slowing down — it’s accelerating, and AI is the accelerant. As more routine, heads-down work gets handled by AI tools, the reason employees come into the office is changing. In an AI-enabled workplace, time in the office will matter less for routine tasks and more as a platform for high-value collaboration, mentoring, training, problem-solving and team-building. That shift has direct implications for what kind of space actually serves its purpose.

Office design should support these behaviors by reducing desk density and increasing high-quality collaboration spaces, hospitality-driven multipurpose rooms and casual “collision” zones. Older, inflexible, commodity space simply isn’t built for that. Tenants who recognize this are upgrading. The ones who don’t are getting left behind — in space that’s increasingly hard to sublease and harder to justify.

Which Markets Are Actually Winning

Geography matters as much as quality. AI isn’t spreading its effects evenly across the country — it’s concentrating new demand in specific places while leaving others more exposed.

The rapid expansion of established and emerging AI and AI-enabled firms is driving new office demand in select tech hubs, most notably the San Francisco Bay Area, and expanding into major talent hubs like Manhattan, Seattle, Los Angeles and Austin. These markets are absorbing real, near-term demand from the AI industry itself — a meaningful counterweight to the broader headwinds affecting office-using employment everywhere else.

Assets within and near agglomeration economies — innovative industry clusters — will act as fortress markets in the long run. For investors, that’s not just a preference. It’s increasingly a prerequisite for outperformance. Markets anchored by AI firms and the industries built around them are in a fundamentally different position than markets without that foundation. The gap between those two categories is widening, not narrowing.

What This Means If You’re Making a Real Estate Decision Right Now

The divide between premium and commodity space isn’t a risk on the horizon. It’s an active market condition, playing out in lease negotiations, tenant decisions, and investment underwriting right now.

If you’re a tenant approaching a lease expiration, the question worth asking honestly is whether your space is on the right side of that divide. Occupiers with upcoming lease expirations should prioritize modular, easily reconfigurable layouts and greater lease flexibility, including shorter terms, expansion and contraction options, and the use of flex space. Locking into the wrong space for the wrong duration, in a market moving this fast, is a costly mistake that compounds over time.

If you’re an investor, the recommendation is clear: focus on top-tier office buildings as the flight to quality continues, consider clustering investments geographically to unlock cost savings, and be discerning about tenant mixes and their exposure to AI.

Brandon Charnas and Current Real Estate Advisors work with clients navigating exactly this kind of inflection point — not just understanding where the market sits today, but tracking where the quality divide is heading and what it means for decisions being made right now. The office market is not going away. But it is separating. And the distance between the winners and the rest is only going to grow from here.