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Office demand was down 30% nationally last month, according to a new VTS Office Demand Index that suggests the pent-up need for new office space may be spent.
VTS, a New York City-based software company, tracked new tenant tours of office properties in prominent U.S. markets. The company says office space demand rose 444% between a bottom in June 2020 and a peak in August 2021. Since then, however, demand has fallen.
“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,” VTS CEO Nick Romito 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.”
Though all major markets saw an October downturn, Los Angeles, San Francisco, Boston and Seattle saw declines of more than 24%. Seattle experienced the biggest drop on that list, down 31%, VTS said, though volatility is more common in Seattle than in some other metros. Conversely, New York City, Chicago and Washington, D.C., saw falls of 10% or less in demand.
As the office market tries to recover, those companies still debating a return to the workplace must now factor in the newest Covid-19 variant, omicron.
Yahoo Finance reported employers were seeking legal advice on the variant within 24 hours of its discovery. New York City has already reinstated indoor mask suggestions, and with little information known on the variant, many employers are waiting for new developments before taking action.
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