AI Anxiety Drives Investors to Mark Down Manhattan Office Real Estate Below 2020 Valuations

Fears that artificial intelligence could reduce demand for Manhattan office space have prompted investors to lower valuations of major office real estate investment trusts below levels seen in June 2020, according to a new report by brokerage firm Evercore ISI cited by Crain's New York.

REIT Share Prices Reflect Investor Pessimism on Office Real Estate

Shares in Vornado Realty Trust have declined 14% this year, while SL Green Realty Corp is down 11% and Empire State Realty Trust has fallen 12%, according to the Crain's New York report. The Evercore ISI report found that both SL Green Realty and Vornado Realty Trust were recently valued by investors at less than they were in June 2020 — a period marked by widespread uncertainty during the early stages of the COVID-19 pandemic.

Investors fear that the growing use of AI will make "much of the white-collar workforce redundant and crush demand for space in Manhattan's office buildings," according to the report. As a result, "the prevailing wisdom among them is that the future for office buildings is grim again."

Bank of Montreal Analysts Flag Lackluster Office Fundamentals

A March 1 report by Bank of Montreal analysts added to the cautious outlook, advising that fundamentals for office towers remain "lackluster." The analysts further stated that "funds for operations, a proxy for cash flow, are expected to fall by 7% for the sector this year," according to Crain's New York.

NYC Comptroller Report Released in February Points to Ongoing Recovery

Not all indicators point in the same direction. A report released in February by the New York City Comptroller's office offered a contrasting view, stating that New York's "fairly robust" office recovery continued in the first weeks of 2026. The report noted that weekday subway ridership rose last year, reaching 80% of pre-pandemic levels, as more workers returned to offices.