Prime Highlights:
Office demand in New York City has returned to pre-pandemic levels, with a 25% year-over-year increase in the fourth quarter of 2024.
VTS data reveals a strong resurgence in office space demand, driven by a combination of employers bringing workers back to the office and an influx of new hires.
Key Background:
Demand for office space in New York City has officially returned to pre-pandemic levels, driven by a combination of increasing in-office work and the influx of new workers. According to VTS, which tracks tenant tours of properties as an early indicator of leasing activity, office demand in the city surged by 25% in the fourth quarter of 2024 compared to the previous year. This marks a significant recovery for the market, reflecting the ongoing trend of employers bringing workers back to physical office spaces.
New York City’s office recovery is particularly influenced by its unique cultural and economic dynamics, especially in industries such as finance and technology. Nick Romito, CEO of VTS, emphasized that the return to office work in the city reflects the distinct needs of these sectors.
SL Green Realty Corp., a prominent real estate investment trust (REIT) focused on Manhattan’s office and retail spaces, reported that leasing demand is accelerating despite missing revenue expectations. The company’s CEO, Marc Holliday, noted that New York City’s Office of Management and Budget expects approximately 38,000 new office-using jobs in 2025, primarily in finance, business services, and information technology. This would result in substantial demand for office space, as these roles are not typically compatible with remote work. As a result, SL Green forecasts strong demand for office space throughout 2025, with occupancy rates continuing to rise.
The recovery is evident through large lease deals, such as IBM’s expansion at One Madison Avenue, where the tech giant increased its footprint by nearly 93,000 square feet. This move further solidifies New York City’s role as a key hub for the technology sector. While New York leads the way, other markets are also seeing improvements, including San Francisco, Seattle, and Chicago, each experiencing notable growth in office demand. However, the national demand in the fourth quarter was up by 12%, signaling broader optimism as businesses demonstrate renewed confidence in office space investment despite economic uncertainties.
