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VTS: “Worst is Officially Behind Us” for Office Demand
After more than a year of increasing new demand for office space nationally, VTS determined that a bottom to the market occurred in late 2022 and early 2023, according to the quarterly VTS Office Demand Index (VODI). Nationally, new demand for office space marked its 12th consecutive month of year-over-year growth, ending the second quarter at a VODI of 62, up 17% from a year earlier and a 34% increase from the VODI’s bottoming out in December 2022 and January 2023 at 46.
A notable shift in office-using employment supports the determination that demand for office space has bottomed, according to VTS. After peaking in August 2022, office-using employment declined 3.9% by early 2024, but that trend has stopped, and growth has remained almost perfectly flat since then. Additionally, work-from-home rates have declined in recent months, yielding greater demand for office space.
“They say you can only see a market bottom after it has long passed, and demand for office space is no different. In the months after the now-declared bottom, the national needle has moved up slowly, making it vulnerable to a quick about-face amidst economic headwinds,” said VTS CEO Nick Romito. “However, the growth the VODI has experienced in the past 18 months combined with positive data on the office-using workforce tells me that the market has reset and the worst is officially behind us.”
- ◦Lease
