Defying Serious Geopolitical and Macroeconomic Headwinds, National Demand for Office Has Reached its Highest Post-Pandemic Level

Despite anxiety over the current war in Iran and economic uncertainty at home, office demand posted sizable quarterly and annual gains in the first quarter, according to the latest VTS Office Demand Index (VODI) report. The increased growth in Q1 was primarily driven by finance, legal, and technology tenants – with quarterly and annual demand for office space up 18 percent and 13 percent, respectively. The double-digit climb now puts national office demand at its highest level since before the pandemic.

This resilience in office demand is even more notable when comparing against the complex broader economic landscape. Office-using employment, a primary driver of demand, fell year-over-year by 0.5 percent – and on a longer term basis, is down 2 percent since the end of 2022. A decrease in office-using employment typically corresponds to lower demand for physical space, however this simultaneously increases employer bargaining power related to remote work, allowing firms to mandate more on-site work to offset the drag on demand.

“Although tested against a turbulent backdrop, demand for office space has seen an exceptional start to the year, with remarkable double-digit quarterly and annual increases in demand,” said Nick Romito, CEO of VTS. “What perhaps is most notable about this quarter’s positive performance is that it was led not just by tech’s sustained AI boom – but also by finance and legal companies entering the market as well.”

Looking locally, Q1 saw a shift in performance across many cities, although San Francisco and New York continued to demonstrate strength compared against other markets. San Francisco, New York, and Los Angeles all experienced double-digit increases in demand on a quarterly basis, with San Francisco climbing a remarkable 70 percent quarter-over-quarter – continuing to benefit from being the global hub of the AI boom. New York’s positive performance was largely attributed to its diversity of industries, as demand from finance, legal, and technology tenants all grew. Los Angeles, which had posted year-over-year declines prior to Q1, recorded a significant uptick from the creative industry – a sector with outsized influence in the market.

On the opposite end of the spectrum, Boston held flat quarterly, but saw a substantial 31 percent decrease year-over-year, making it the worst-performing market in the report. Seattle, Washington, D.C., and Chicago – all lacking a major catalyst of growth, landed in the middle of the pack in terms of quarterly performance, all experiencing quarterly contractions. Of this middle tier, Chicago fell the furthest, down 11 percent quarter-over-quarter. Despite its quarterly decline, Seattle saw strong annual momentum, up 44 percent from 2025 levels.

“Despite the national surge, the local picture city-to-city remains quite nuanced. The AI boom continues to be a dominant headline for office, and markets that lack a major tech presence, or are without a primary growth lever in another industry, are seeing declines in demand,” said Ryan Masiello, Chief Strategy Officer of VTS. “A persistent trend for many quarters is that San Francisco and New York are simply outshining the rest due to their positions as global hubs of tech talent, although LA’s positive performance this time around was a new bright spot – and it remains to be seen if Los Angeles can sustain growth in the near term.”

About VTS

VTS is the only AI-driven technology platform enabling intelligent real estate by unifying industry professionals, investors, and their customers at scale. In 2013, VTS revolutionized commercial real estate leasing operations with what is now VTS Lease. Today, VTS is the largest first-party insights and collaboration engine in the industry, transforming how strategic decisions are made and executed by the real estate industry globally.

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 the platform worldwide. VTS is utilized by over 45,000 professionals and over 1.2 million total users each day, including industry-leading customers such as Blackstone, Brookfield Properties, LaSalle Investment Management, Hines, BXP, Oxford Properties, JLL, and CBRE.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260428974437/en/

Media gallery