With VTS Data now officially live in London, we can take the industry's first-ever look at the performance of two global metros that serve as the primary bellwethers for global office demand and asset values.
How do these two powerhouse markets compare to one another?
NYC vs. London: The VODI Breakdown
In February 2024, the VTS Office Demand Index (VODI) reported nearly identical scores for both cities: 77 in NYC and 76 in London. Year-to-date (YTD) demand remains remarkably resilient, sitting at just -5% in NYC and -6% in London compared to pre-pandemic levels (2018–2019).
February Performance Milestones
London: While London’s demand returned to pre-pandemic levels as early as 2021, February saw the largest monthly fall in the VODI since May 2020. This marks the first time London has fallen behind New York, which is currently the second-best-performing gateway market in the U.S., trailing only Los Angeles.
New York City: NYC recorded its best February VODI reading since the pandemic began (77 vs. 60 in Feb. ‘23 and 56 in Feb. ‘22).
Active Tenant Demand and Square Footage
As of February 2024, the volume of tenants actively seeking space remains high, though the two cities are moving in different directions:
- NYC Active Demand: 30.6M sq. ft. of active tenants. NYC remained flat month-over-month (MoM), marking the 9th consecutive month at or above 30M sq. ft., 11% higher than the 2021–2023 monthly average.
- London Active Demand: 13.1M sq. ft. of active tenants. London saw a 7% MoM decrease, the first fall in three months. While the number of individual requirements remains flat, the overall square footage suggests a drop in average requirement size.
Sector Analysis: Who is Driving the Market?
Both markets are heavily anchored by FIRE (Finance, Insurance & Real Estate) tenants, but the secondary drivers are shifting.
| Sector | NYC Demand Share | London Demand Share |
| FIRE | 38% | 37% |
| TAMI (Tech, Ad, Media, Internet) | Overtaken by "Other" | 23% (Highest since Apr '22) |
| Other (Public, Health, Energy, etc.) | 32% | 20% |
In NYC, the "Other" industries have officially overtaken TAMI as the second-largest share of demand. In London, TAMI is rebounding, representing its largest share of the market since early 2022.
The Shift in Requirement Sizes
2023 was the year of the "Mega User," but 2024 data suggests a reversal.
- In London: The average size of 25K+ sq. ft. requirements increased by +32% in 2023. In February 2024, these larger requirements fell by -35%.
- In NYC: Mega users drove 25K+ sq. ft. requirements up 29% in 2023 compared to 2022, but February 2024 saw a sharp drop of 38% in this category.
FAQs
1. What does the VODI score of 77 for NYC indicate?
The VTS Office Demand Index (VODI) uses 100 as the pre-pandemic average (2018–2019). A score of 77 means NYC is currently operating at 77% of its typical pre-pandemic leasing activity. This is a significant recovery compared to the scores of 56–60 seen in previous years.
2. Is the London office market in trouble?
While London saw its largest monthly drop since 2020, it is important to note that demand is still only 6% below pre-pandemic levels. The drop in square footage suggests that while companies are still looking for space, they are opting for smaller, more efficient floor plates.
3. Why is the "FIRE" sector so important for these markets?
Finance, Insurance, and Real Estate (FIRE) firms are traditionally the "bedrock" tenants for gateway cities. Since they represent nearly 40% of demand in both NYC and London, the stability of these industries is a direct indicator of the overall health and valuation of Class A office assets.
Want more London Data? Take a look at the VTS Leasing Prediction Outlook for 2024, comparing our outlook for new demand in London, NYC, and San Francisco.n Francisco.
