Demand for Office Space Declined 30 Percent Nationally This Fall: Report
Demand for office space nationwide fell in October to its lowest level this year, following a massive post-vaccine surge from tenants looking for space during the spring and summer, according to new data from commercial leasing platform VTS.
The seven major office markets tracked by the company saw demand slide by 30 percent since peaking in August, according to VTS’ report. The firm’s office demand index tracks tenants’ office space requirements and tours in major U.S. cities.
Tenants seeking new space increased 444 percent between June 2020 and August 2021, in a run-up that VTS attributes to pent-up demand from the beginning of the pandemic. However, it declined 18 percent in September and 11 percent in October.
“As we pass the 18-month mark since the start of the pandemic, employers and employees alike have largely adapted to a new way of working and in many cases, that means permanent remote or semi-remote work,” Nick Romito, the CEO of VTS, said in a statement. “The longer we stay in limbo — the place where, even with vaccines and better COVID-19 treatments, there is still trepidation about returning to work — the greater the likelihood we have a permanent loss of demand for office space and, eventually, a new normal. Time is not on the side of office leasing.”
New office demand fell by 24 percent or more in Boston, Seattle, San Francisco and L.A., according to the proptech company. Meanwhile, it fell about 10 percent or less in New York, Chicago and Washington D.C.
But even with office demand slipping, Manhattan saw its strongest month of leasing since the pandemic hit in November. The borough saw 3.1 million square feet of space leased last month, the first time that metric hit above 3 million square feet since January 2020, Crain’s New York Business reported.
Rebecca Baird-Remba can be reached at firstname.lastname@example.org.