AI is rebuilding US factory payrolls and reviving SF/NYC office leases — the building trades are the lever

The strongest counter-evidence sits in the September 2026 BLS Employment Situation: US manufacturing payrolls added 9,000 jobs in the month alone and are up 72,000 since a December 2025 trough, with machinery manufacturing and electrical-equipment/appliance components the standout contributors. Eaton's record Q2 2026 results — sales up 21%, organic sales up 14%, total Electrical backlog up 43% year-over-year — sit directly inside that line item.

Brookings research by Bahar and Wright (May 2026) finds that counties hosting the first large data center see data-processing employment rise 56% and telecommunications employment rise 43% over the following decade — modest in absolute terms but persistent. The bulk of the immediate hiring, however, runs through construction. The Labor Department's establishment survey shows nonresidential specialty trade contractors added roughly 86,000 workers over the past year, with electricians for data centers the dominant sub-category.

Per CBRE, AI companies have leased 21 million square feet of office space in San Francisco and Silicon Valley since 2019 — roughly equivalent to 15 Salesforce Towers — and another 9.4M sq ft across Manhattan, Boston, and Seattle. The H1 2026 share tells the sharper story: AI firms were responsible for 58% of all Bay Area office leasing in the first half. The Q3 print from Savills confirms the upturn is broadening, not fading: 3.9M sq ft of SF office leases signed in Q3 2026, +77% year-over-year and on track for a full year well above any post-pandemic precedent.

Manhattan's H1 2026 office leasing totaled 17.7M sq ft, up 12.6% year-over-year, with AI companies taking 1.7M sq ft of that volume. CBRE also reports that New York City now houses more tech workers (~394,300) than San Francisco for the first time in 13 years of tracking — a notable inversion given NYC's lower share of new-economy anchor tenants in 2019. Prime Manhattan office vacancy has compressed to single digits and net effective rents are growing again.

The risk flagged in the original LIBN piece (via Partnership for New York City): AI displacement of finance, media, and legal jobs could erode the payroll base that supports the leasing recovery. For now, the offset is positive — AI tenant demand is concentrated in Class A product that landlords like Vornado Realty Trust and SL Green Realty dominate. For Q2 2026, Vornado posted $1.877B in revenue (+5% YoY) and SL Green posted $998M (+27% YoY), with both reporting improved leasing momentum in midtown and the Plaza district.

The clearest listed plays cut across three layers of the supply chain. Tier 1 — electrical and mechanical contractors building the data centers: EMCOR Group, Comfort Systems USA, and MasTec. Tier 2 — electrical equipment, transformers, switchgear, and HVAC: Eaton and Vertiv. Tier 3 — electric transmission and grid build-out: Quanta Services. Each saw Q2 2026 revenue jump 20%+ year-over-year, with order backlogs extending into 2027. The market has priced much of this in — Comfort Systems' market cap moved from $11.5B in Q1 2024 to roughly $57.7B on a trailing basis, while Quanta tripled to ~$106B over the same span — but the underlying backlog growth has tracked faster than the multiples.

On the office side, Vornado Realty Trust owns the densest Manhattan exposure with a top-tier SF asset (Market Square) and a Chicago trophy asset, while SL Green Realty is the purest Manhattan play. Both report a leasing environment in midtown and the Plaza that has flipped from tenant-favorable to landlord-favorable on AI-led demand for Class A space. The catch: their high debt loads (Vornado debt-to-equity 1.57x; SL Green 1.51x) make the recovery sensitive to long-end rates.

Two risks bookend the upside. Short term, gas-turbine wait times now stretch to roughly four years per industry surveys, capping how fast hyperscaler power build-out can convert into new data-center capex — and 75 data-center projects worth ~$130B were blocked or delayed by local opposition in Q1 2026 alone. Long term, the Partnership for New York City and similar observers warn that productivity gains from AI in finance, media, and law could erase the white-collar payroll base that ultimately pays the rent in NYC and SF trophy towers. The September 2026 BLS print (4.2% unemployment, manufacturing +9K) reads as a still-healthy labor market — but EMCOR and Comfort Systems cannot defend multiples built on AI-data-center backlog if hyperscaler capex growth decelerates from the 2025–2026 pace.