New Demand for Office Space Highest Since Pandemic Onset
Nationally, new demand for office space rose to a 15-month high in August and is now just 13% below pre-COVID-19 levels — up 235% year-over-year — reflecting a strong recovery from last summer, according to the VTS Office Demand Index (VODI).
Last month’s increase in office demand indicates the Delta variant didn’t dampen employers’ searches for office space. And in fact, office-using employment saw a strong rebound in July, with a monthly annualized growth rate of 4.3%, up strongly from June when office-using employment recorded the slowest growth in 12 months.
What VTS CEO Nick Romito said: “When the pandemic first hit and the world came to a halt, there was a clear correlation between rising COVID-19 cases and falling demand for office space — as cases went up, demand went down. Now, even as cases have risen exponentially over the past few months due to the delta variant, we’re not seeing the same correlation. While it may be a bit premature to say that there will not ever be a material impact on new demand and office-using employment as of right now, we’re not seeing it. Companies, even if delayed, are making plans to get their employees back in the office and that bodes well for the office space market.”
What is the VTS Office Demand Index (VODI)?
The VODI is the earliest available indicator of forthcoming office real estate trends, locally and nationally, and represents up to 99% of new demand for office space in seven major markets, including New York City, Washington DC, Los Angeles, Chicago, Boston, Seattle, and San Francisco. The VODI tracks tenant tours, both in-person and virtual, of office properties across the nation, and is the only commercial real estate index to track tenant demand.
The VTS Office Demand Index is powered by proprietary VTS Data, composed of aggregated and anonymized commercial real estate data from the 12B+ square feet of assets managed on the VTS platform.
Get today’s commercial real estate market trends in the September VODI report:
- How is the Delta variant impacting return-to-office plans in major cities?
- Which markets saw office demand rise above their pre-pandemic averages?
- How has employment in office-using sectors rebounded?
- Which market experienced its third month of falling demand?
- Where is Trophy and Class A office space getting more popular?
Download the full VTS Office Demand Index September 2021 report now for in-depth insights into demand recovery and detailed methodology.
“The health of individual office markets is hyperlocal. Local vaccination rates, government mandates, and local sentiment are just a few of the drivers of new demand for office space,” said VTS Chief Strategy Officer Ryan Masiello.
Miss our latest webinar with the VTS Data team Chief Strategy Officer Ryan Masiello, Head of Market Research Eli Gilbert, and Director of Investor Research Max Saia? They went deep into today’s office demand trends to share what the market is doing today, where we can predict it’s headed, and how to convert market activity into executed leases. Stream it on-demand now.
Read our official announcement here.