San Francisco Emerges as the Nation’s Leading Office Market, Outpacing its Pre-Pandemic Average, Due to Exceptional Annual and Quarterly Increases in Demand

NEW YORK — October 29, 2025 – Robust annual gains in demand for office space were tempered by a modest quarterly decline in Q3, according to the latest VTS Office Demand Index (VODI) report. These divergent paths of demand unfolded against a backdrop of powerful, opposing macroeconomic forces: ongoing trade tensions, a stalling labor market, a 25 basis point interest rate cut by the U.S. Federal Reserve, and a looming government shutdown that began on October 1. Nationally, demand for office space increased a notable 16 percent year-over-year, while also experiencing a four percent quarter-over-quarter decline, demonstrating that near-term momentum in the office market is stalling, even while improving over 2024 levels. 

Many of the markets whose industry mix skews to be more remote-friendly, and have largely struggled in the post-pandemic years, experienced sizable gains in the third quarter, while markets that skew to be more office-centric cooled significantly. This bifurcation reflects how markets that are more office-oriented, like New York and Los Angeles, were the first to rebound post-Covid and substantially outperformed those with a higher degree of remote work, like San Francisco and Seattle. The latter group of cities are benefitting from an impressive wave of new tech demand, and are causing their VODI levels to catch up, and in the case of San Francisco, emerge as the nation's leading office market.

“There are a number of remarkable bright spots across the market at the moment as the tech industry continues to run hot, driven by demand from AI, with Seattle, Boston, and New York all experiencing double-digit year-over-year growth, and San Francisco experiencing astounding triple-digit growth,” said Nick Romito, CEO of VTS. “However, looking at the aggregate, the picture is a mixed bag, as this annual growth in tech-centric markets is set against stagnation or double-digit quarterly declines in four of the seven markets we track.”

San Francisco was by far the standout this quarter, with the city experiencing a 112 percent annual increase in demand from Q3 2024, and climbing 60 percent from the second quarter. These significant climbs in demand for office space now squarely place San Francisco as the top-performing market in the country, with New York – which was first in the nation to bounce-back from the pandemic, at a distant second place, with a VODI of 78 versus San Francisco’s 123. This represents San Francisco's recovery from pandemic-era lows and signals renewed momentum in the market. Other positive standouts include Seattle and Boston, both of which climbed out of Q2 slumps. Seattle experienced a 66 percent year-over-year climb and a 28 percent quarterly increase, while Boston was up 85 percent quarterly and 19 percent versus last year. A sharp increase in large tenants drove Boston’s increase, while high demand from the tech sector fueled Seattle.

In contrast, Chicago and Los Angeles faltered considerably, as both markets experienced double-digit decreases on an annual and quarterly basis, with Chicago down 25 percent against 2024 levels and down 40 percent from Q2, and Los Angeles decreasing 30 percent annually and 12 percent quarterly. Chicago’s decline was notable in that demand from industries across the board decreased. Washington, D.C. was stagnant, with the most modest of increases, up four percent on an annual basis and two percent from June.

“Year-to-date, the tech industry is what’s driving the most meaningful movement in the market, with hubs such as San Francisco, New York, and Seattle benefitting from their large share of companies in the space,” said Ryan Masiello, Chief Strategy Officer of VTS. “AI is clearly having a profound impact on the market at the moment, and it appears as though cities with a high-degree of tech talent and companies will be best-positioned for office demand, at least in the current environment.”

About VTS 

VTS is the industry's only technology platform that unifies owners, operators, brokers, and their customers across the commercial and residential real estate ecosystems. 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 insights and collaboration engine in the industry, transforming how strategic decisions are made and executed by real estate professionals across the globe.

With the VTS Platform, consisting of VTS Lease, VTS Market, VTS Activate, and VTS Data, every stakeholder in real estate is given real-time market information and workflow tools to do their job with unparalleled speed and intelligence. VTS is the global leader, with more than 60% of Class A office space in the U.S., and 13 billion square feet of office, residential, retail, and industrial space is managed through our platform worldwide. VTS is utilized by over 45,000 professionals and over 1.2 million total users, including industry-leading customers such as Blackstone, Brookfield Properties, LaSalle Investment Management, Hines, BXP, Oxford Properties, JLL, and CBRE. To learn more about VTS, and to see our open roles, visit www.vts.com.