Office Tours on the Upswing Especially in NYC and LA

Data show “new life” in the office market, according to the Q4 2024 VTS Office Demand Index (VODI), which rose for a sixth consecutive month.

Long the laggard in commercial real estate performance since the pandemic and the work-from-home way of the business world for many, this Index fell 15 consecutive months before embarking on this upswing.

The VODI tracks unique new tenant tour requirements of office properties in core U.S. markets.

Nationally, the VODI increased to 55, marking a 19.6 percent year-over-year and 7.8 percent quarter-over-quarter rise in demand for office space. The national VODI bottomed in December 2022 at 44.

VTS said positive economic data, easing recession fears, and stabilizing work-from-home rates has driven the positive performance lately. This has “injected confidence in the minds of employers with regard to committing to new office space,” according to the report.

“The first step in the recovery of the office market is to stop the bleed, and according to our data, we likely have,” VTS CEO Nick Romito said in prepared remarks.

“However, it is still too early to call a bottom nationally. Today, the office market is stable, but it is also fragile. While the cards are stacked in favor of a slow but steady recovery, it wouldn’t take much to startle employers again and pause any upward momentum.”

New York City and Los Angeles saw the most impressive annual growth on an already elevated base, up 38.9 percent and 46.8 percent, respectively, and up 21 and 22 points, respectively.

“Among all cities, New York City and Los Angeles have been the leaders in paving the way to recovery for quite some time. As they get closer to their eventual normal, it becomes harder to see large jumps in demand, but both cities did just that. It is sustained and remarkable,” according to Ryan Masiello, Chief Strategy Officer of VTS.

New York City and Los Angeles are making bullish bets on their future, Masiello added.