GlobeSt. – After jumping 43.3% in the second quarter of 2021, demand for office space is only 14% below its 2018-2019 average, the most recent pre-pandemic benchmark.
If a city is seeing a faster downtown office recovery, two things are usually happening. First, local employers are requiring employees to come back into the office. Then, cities are seeing strong growth in job listings, says the VTS Office Demand Index (VODI) monthly report.
Increasingly, these factors are in play across even the largest hard-hit metro areas.
New York (98% recovered), Los Angeles (99% recovered), and Chicago (83% recovered) lead the nation’s office recovery, with New York and Los Angeles now essentially back at their 2018 and 2019 average demand velocity. New York, Los Angeles and Chicago have job postings 21.0%, 27.0% and 29.2% above their pre-pandemic levels.
The cities with slower office recoveries, San Francisco (67% recovered), Boston (56% recovered), Seattle (66% recovered), and Washington, D.C. (76% recovered), are home to some of the nation’s highest shares of remote-friendly jobs. Three of the four of those cities have a lower rate of job postings than their counterparts.
San Francisco, Boston and Seattle have job postings 10.8%, 20.8% and 16.2% above their pre-pandemic levels. While Q2 demand for office space grew 84.2% in Boston, the city still has the lowest VODI of those covered in the report.
In general, demand for office jumped 43.3% in the second quarter of 2021 and is now only 14% below its 2018-2019 average, the most recent pre-pandemic benchmark.
With all markets showing demand for office space in Q2, the nation’s recovery from the pandemic changed seasonal leasing patterns. While demand for office space usually moderates in the summer, it actually rose 10.3% month-over-month in June, after taking a short pause in May. After jumping 43.3% in the second quarter of 2021, demand for office space is only 14% below its 2018-2019 average, the most recent pre-pandemic benchmark.
“Employers are grappling with how to handle the future of work—do you make employees come back, offer hybrid opportunities or go fully remote? While it’s not our place to say that every company should bring their employees back into the office full-time, we can say that there is a clear distinction in recovery between cities depending on how remote-friendly their jobs are,” said VTS CEO Nick Romito said in a prepared statement.
The flight to quality is still strong in New York City, with more than two-thirds (76.7%) of the demand for office space in June for space in Trophy and Class A buildings. That is a lower share than during the peak upgrade opportunity during the pandemic trough in June 2020 (79.4%) but still a higher percentage than right before the pandemic in February 2020 (71.3%).