Even as political and economic uncertainty looms in New York, business leaders remain largely optimistic, with most planning to expand their office space in the city over the next year and a half.
Some 96% of city business executives say they are confident in their company’s growth prospects this year, up from 90% in 2025, a new study from KPMG found. The Big Four accounting firm surveyed 103 business leaders in the position of vice president and higher, including more than three‑quarters in the C‑suite. Businesses surveyed have at least $50 million in annual revenue.
Still, in a sign of caution about the city, the percentage of those who expressed their confidence in the growth prospects of the city trailed by 10 percentage points at 86%. New York real estate executives recently also exuded upbeat energy when it came to their business outlook this year.
As New York has led the U.S. office market recovery, closing last year with its best office leasing volume since at least 2019, the KPMG study offers hope that momentum will continue. In fact, 70% of the city business leaders who responded said they plan to increase their commercial real estate footprint in the next 12– to 18 months. That's up from 68% who said so in the 2025 survey.
In a telling sign of the flight-to-quality trend that’s driven New York’s leasing activity, 90% of executives polled said “creating spaces for connection, collaboration and friendship is an important part of talent strategy.” Some 95% are encouraging and facilitating non-work-related breaks and events to “foster stronger relationships at work,” the study found.
“We're seeing a confidence gap that signals an undercurrent of uncertainty about what’s ahead,” KPMG New York City Managing Partner Yesenia Scheker-Izquierdo said in a statement. “But that gap also creates opportunity. New York remains essential to the talent, businesses and innovation that drive global growth. Now is the moment for business and city leaders to work together to strengthen the conditions that will keep New York a vibrant place for years to come.”
It comes as some analysts have said artificial intelligence could cut hiring and the need for space. At the same time, New York commercial real estate professionals had expressed concern before Zohran Mamdani, a self-described Democratic Socialist, was elected mayor last fall. He took office at the start of last month and some property professionals said they would be watching closely.
Deal activity increases
Even so, executives in the survey declared their plans for growth go beyond physical workspace: 81% of companies see opportunities to make acquisitions, up from 75% in 2025.
As borrowing costs have declined, deal activity of all kinds has picked up, industry professionals say. For instance, New York’s commercial real estate investment sales have risen 24% to $35.3 billion, led by a more than doubling of office transactions last year, a study by Ariel Property Advisors found recently.
Marc Holliday, chief executive of SL Green, Manhattan’s largest office landlord, recently said foreign investors remain gung-ho about New York, adding the city “is differentiating itself from other U.S. cities in significant ways.” He described Manhattan real estate as the real estate equivalent of U.S. Treasuries that provided risk-adjusted downside safety and a path toward real returns.
However, in a potential threat to office demand, the KPMG survey found plans to increase hiring dropped to 66% this year from 77% in 2025, with the growing adoption of artificial intelligence that “reshaped workforce structure.” Some 86% of executives surveyed said they “are prioritizing talent with AI skills” while 57% said they are simultaneously reducing entry-level positions due to AI and automation. Overall, 11% of the executives surveyed said they are already cutting company headcount through automation.
Real estate executives say they’ve not seen any impact of that on space needs, noting AI-tied firms have been a key driver of New York’s leasing activity.
“To the extent that there's any space savings on other businesses, it's clearly being offset by an exploding growth of AI demand in the marketplace,” said Steve Durels, head of leasing at SL Green, recently, adding he hasn’t seen any instance “where tenants have downsized as a result of AI.”
Demand from AI-related tenants continues to be brisk after they leased a million square feet in the city combined last year, Durels said.