Wednesday, 19 August 2026
Artificial intelligence and technology companies are becoming an increasingly important source of office demand across Europe, adding new pressure to a market where the availability of high-quality space in the strongest central locations is already limited.
Technology companies accounted for around 22% of European office leasing activity during the first half of 2026, compared with approximately 14% previously, according to Savills. The increase represents a significant change following several years in which many technology businesses reduced expansion plans, reassessed staffing requirements and became more cautious about long-term property commitments.
The recovery is taking place against a very different office market from the one that existed before the pandemic. Companies are generally more disciplined about the amount of space they occupy, but many are simultaneously becoming more demanding about its quality. This is concentrating requirements in modern, well-connected and energy-efficient buildings rather than producing a broad recovery across all office stock.
The consequences are particularly visible in major central business districts. Savills estimates that vacancy among prime CBD offices is around 2%, leaving companies with relatively few options when searching for the highest-quality accommodation. This limited availability is helping landlords maintain upward pressure on rents even though vacancy across the wider office market can remain considerably higher.
AI companies are contributing to this imbalance. The rapid expansion of artificial intelligence has primarily been associated with data centres, computing infrastructure and electricity consumption, but the sector also requires conventional workplaces for software engineers, researchers, commercial teams, management and other specialist employees.
As these businesses expand, office requirements are emerging in established European technology centres and university cities where companies can access skilled employees. The effect is likely to be particularly concentrated because technology businesses frequently seek locations within existing innovation and employment clusters rather than distributing operations evenly across cities.
The new technology leasing cycle also differs from the expansion that preceded the pandemic. Large occupiers are less likely to take substantial amounts of space simply in anticipation of future headcount. Instead, companies are increasingly prepared to occupy less space while investing more in the quality of the working environment.
This is changing the economics of the office. A company reducing its total footprint can still increase expenditure per workstation if it relocates into a better building. As a result, lower overall space requirements do not automatically translate into weaker demand for prime property.
Hybrid working has reinforced this trend. When employees are not required to attend an office every day, companies have a greater incentive to provide workplaces that staff actively want to use. Transport connections, restaurants, services, collaboration areas, environmental performance and the overall quality of the building consequently become more important.
For technology companies, these factors can also influence recruitment. AI, software, cybersecurity and other rapidly developing industries compete for highly qualified specialists, making workplace location and quality part of the broader employment proposition.
At the same time, the supply response remains constrained. Higher construction costs, expensive financing and uncertainty surrounding future office requirements caused many developments to be postponed during the previous few years. The resulting reduction in new construction means relatively little prime space is entering some markets just as occupier demand begins to strengthen.
This creates a widening divide within Europe’s office sector. Modern buildings in central locations can experience low vacancy and rental growth while older properties elsewhere in the same city struggle to attract occupiers.
The distinction is becoming increasingly important for investors. Rather than treating offices as a single property category, capital is becoming more selective according to location, building specification, environmental performance, lease profile and the amount of investment required to remain competitive.
Existing buildings in strong locations could therefore offer opportunities for refurbishment and repositioning. Owners capable of upgrading energy performance, workplace amenities and technical specifications may be able to capture occupiers unable to find sufficient new space.
The position is more difficult for obsolete offices in weaker locations. Where substantial capital expenditure is required without certainty that higher rents can subsequently be achieved, owners may increasingly have to consider conversion, redevelopment or alternative uses.
Technology demand could deepen this division. Successful AI businesses often begin in flexible offices, laboratories, university environments or relatively small premises before moving into conventional office accommodation as their workforces expand. Growth within Europe’s AI ecosystem could therefore create a continuing pipeline of occupiers progressing into larger properties.
The implications extend beyond office investment. Technology employment can support demand for housing, hospitality, retail and other services around established business districts. Cities capable of combining skilled labour, universities, digital infrastructure, transport and suitable commercial property may consequently benefit disproportionately from the expansion of AI.
For developers, the figures also provide a clearer indication of where future opportunities may emerge. A general shortage of offices is not necessarily developing across Europe. Instead, there is an increasingly visible shortage of the particular buildings that major occupiers now want.
That distinction will be central to the next stage of the market cycle. New development will need to compete not only on location and rent but also on energy efficiency, employee experience, flexibility and long-term operating costs.
The increase in technology’s share of leasing from around 14% to 22% during the first half of 2026 suggests that another important source of demand is now strengthening just as prime supply remains constrained.
Europe’s office recovery is therefore unlikely to be evenly distributed. AI and technology expansion may support further leasing and rental growth, but much of the benefit is likely to flow towards a relatively narrow group of modern buildings in established business and technology locations.
The emerging office cycle is becoming less about how much space Europe has and increasingly about whether that space meets what companies now require. For owners of the best assets, the growth of AI and technology businesses could reinforce an already tight market. For secondary properties, it raises the pressure to invest, reposition or find a new purpose.
