A Major Office Leasing Dichotomy
A Major Office Leasing Dichotomy
On the one hand, office tenant improvement costs have gone through the roof, and at least here in the San Francisco Bay Area Region budgets of $40-80/rsf are common, which can cause great angst with landlords trying to justify making the deal. Amortizing the tenant improvements over a longer-term lease can alleviate some of this stress and having a 10 or even 7-year lease term versus just five years can make a significant difference in bridging the economic gap. However, artificial intelligence has thrown a monkey-wrench in this. “Artificial intelligence is making it harder for companies to predict how many employees they will have, where those employees will actually work, and therefore how much office space they will need. That uncertainty is beginning to influence real estate decisions. According to a new Censuswide survey commissioned by International Workplace Group, 60% of CEOs and CFOs said AI had made it more difficult to estimate their office requirements over the next two years.” PLOT Daily July 28, 2026 What are tenants and landlords to do?
