Office demand jumped +20% m/m in March, according to VTS.
Uptick in Office Demand in March
Measured by new tenant tours, the most recent report from VTS, a commercial real estate technology platform, indicates that office demand increased +20% m/m in March and roughly +8% from one year ago.
After five months of office demand stagnation, commercial markets in New York City, Washington DC, Chicago, Los Angeles, Boston and San Francisco are making notable recoveries. Seattle, traditionally the most volatile market, was the only core market to see a decline in office demand in March.
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Marked Improvement in Demand
According to Moody’s Analytics, the office vacancy rate during Q1 2022 was down -18.1% y/y. Though still down, Moody’s considered this -18.1% y/y decline a market improvement from a vacancy rate of 18.5% during the height of the pandemic.
“Demand for office space this month is more in line with what we expect to see this time of the year,” said Nick Romito, CEO of VTS. “Looking ahead I expect that we’ll continue to see demand ebb and flow in a typical seasonal pattern, but to really get out of the prolonged period of depressed demand we have seen of late, we’ll need to see demand exceed seasonal norms over the course of many months.”
According to this latest report from VTS, offices were about 43% occupied, a pandemic high.
A new survey of 185 office using companies by CBRE indicated that 36% of employers said a return to on-site offices was already underway. 25% of on-site employers indicated their workers would be back by the end of June. Approximately 13% of on-site employers said a return to the office was up to their employees and 10% still remained uncertain.
Changes to On-Site Work Environments
Approximately 70% of employers indicate that they intend to offer workers hybrid working conditions in both the office and remotely.
The CBRE report indicated that workers, when they do return to their onsite offices, will find heightened cleanliness and air filtrations systems, more in-office technology tools for crisper videoconferencing, touchless options and more flexible office space such as open desking.
“That flexibility is desired for a number of reasons, including ability to scale up and down, give employees more choice over where to work or even just preserve capital” said Julie Whelan, global head of occupier research with CBRE. Whelan added, “But employees do benefit from being in productive space in good locations with typically very good amenities and experience.”
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Thanks to CNBC.
