AI and tech demand drive office market recovery in Cambridge and Northern Virginia

Artificial intelligence, technology, and defense sectors are driving a recovery in office leasing markets in key U.S. tech hubs.

In Cambridge, Massachusetts, AI companies now account for over 19 percent of tenant requirements. Recent leasing activity includes deals by AI software developer Blitzy and chatbot parent Anthropic. While Greater Boston has historically trailed markets like San Francisco and Silicon Valley in AI-related leasing, the region is seeing an uptick in innovation and tech sector demand. East Cambridge maintains the highest asking rents for Class A buildings at $88.18 per square foot.

Similarly, Northern Virginia’s office market saw its vacancy rate fall for the sixth consecutive quarter to 21.7 percent. The market recorded over 672,000 square feet of positive net absorption in the third quarter, bolstered by demand from AI, technology, and defense tenants. A significant portion of this gain was driven by the National Science Foundation’s 380,000-square-foot move. Total available office space in the region has dropped to its lowest level in a decade.