Amidst a Cooling Job Market, Office Demand Holds Steady in September

Modest gains keep demand for office space below half of its pre-pandemic pace, according to a VTS Office Demand Index (VODI) analysis

NEW YORK–(BUSINESS WIRE)–New demand for office space increased slightly in September after three consecutive months of losses according to the latest VTS Office Demand Index (VODI) analysis. The national VODI grew by two VODI points, from 46 in August to 48 in September. A VODI of 50 or below indicates the flow of new tenants seeking office space is running at less than half of its pre-pandemic pace in 2018 and 2019. The VODI tracks unique new tenant tour requirements, both in-person and virtual, of office properties in core U.S. markets, and is the earliest available indicator of upcoming office leasing activity as well as the only commercial real estate index to explicitly track new tenant demand.

Nationally, demand for office space increased four percent month-over-month in September despite slight seasonal headwinds. Prior to the pandemic, demand for office space tended to decline in September, falling 3.1 percent in September 2018 and 1.1 percent in September of 2019. Despite the slight increase in demand in September, the VODI has generally been trending downward in recent months amid rising interest rates and a cooling labor market.

“The verdict is still out on the anticipated depth of any upcoming recession. Combine this economic uncertainty with signs of a cooling labor market, and it’s no surprise employers are pumping the brakes on plans for office leasing,” said Nick Romito, CEO of VTS. “Demand for smaller office spaces in particular has remained steady. This could reflect a dynamic where smaller tenants delay leasing plans while larger tenants shrink their requirement size, making up for lost demand in the small-space category.”

Locally, all markets with the exception of New York City experienced relatively modest, single-digit fluctuations in September. Demand for office space fell 2.5 percent in San Francisco, 6.1 percent in Boston, 6.5 percent in Chicago, and 7.3 percent in Los Angeles. Demand in Washington, D.C. grew 1.6 percent, and stayed flat in Seattle at a VODI of 44.

New York City was the outlier in September. After a sharp decline from a VODI of 80 in May to 44 in August, demand for New York City office space regained 10 VODI points in September, a 22.7 percent increase month-over-month making up nearly half of its prior four month loss. This bounce back was driven largely by an increase in demand for mid-size spaces in September.

“Demand for office space is still well below its pre-pandemic levels, but after a year of volatility and declining demand over the past few months, September’s relatively modest changes bring some welcome stability to the market,” said Ryan Masiello, Chief Strategy Officer of VTS. “The steadiness of Seattle is particularly notable since it’s typically the most volatile VODI market analyzed. Its steadiness, alongside the minor fluctuations in other markets, signals a broader consistency in demand for office space this September.”

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VTS is the commercial real estate industry’s leading technology platform that transforms how strategic decisions are made and executed across the asset lifecycle. In 2013, VTS revolutionized the commercial real estate industry’s leasing operations with what is now VTS Lease. Today, the VTS Platform is the largest first-party data source in the industry and delivers data insights and solutions for everyone in commercial real estate to fuel their investment and asset strategy, leasing and marketing automation, property operations, and tenant experience.

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Eric Johnson


Lauren Riefflin

Kingston Marketing Group

Jullieanne Cueto