While a number of office markets experienced notable year-over-year growth, many also witnessed a quarter-over-quarter cooling, according to the Q2 2025 VTS Office Demand Index (VODI) report

A sharp diverging picture of office demand emerged in the second quarter, with some major U.S. markets experiencing strong annual gains in demand compared to the same period from the previous year, while others witnessed a quarter-over-quarter cooling, according to the latest VTS Office Demand Index Demand (VODI) report. Nationally, office demand was up just over 11 percent year-over-year at the end of June, despite it remaining relatively flat quarterly – down 1.4 percent from the end of March. An undeniable air of uncertainty was present in the second quarter, due to the changing landscape of global trade policy, geopolitical escalations, and as office-using employers attempted to establish the short- and long-term impacts of AI on productivity and the workforce.

The larger economic backdrop proved complex, with data from Indeed showing overall job postings fell 2.4 percent quarterly, however, after a period of decline beginning in 2023, office-using jobs grew in Q2 with the addition of 47k new jobs. Additionally, the "push and pull" between employers and employees over remote work saw a surprising reversal in the second quarter, with remote job postings increasing from 6.7 percent to 7.8 percent, implying employer leverage in the push for a return-to-office is more nuanced and less linear than was previously thought.

“The last quarter presented a number of macroeconomic challenges to the office market, and despite that, demand among tenants remained relatively persistent, with national office demand posting double-digit annual gains,” said Nick Romito, CEO of VTS. “There’s a number of major economic, political, and innovation forces currently at play which have meaningful impacts on office demand – both in terms of headwinds and greenshoots. I think we’ll continue to see somewhat of a mixed bag with regards to office demand in at least the near term.”

City-by-city, a comparison shows clear winners and losers, with some posting healthy gains and others experiencing sharp drops in demand. Chicago and San Francisco were the standout leaders this quarter – both fueled by double digit gains in office demand on a quarter-over-quarter and year-over-year basis, with Chicago up 60 percent compared to last June, and up 35 percent since the first quarter. San Francisco, continuing to be buoyed by tech companies in AI, saw demand up 27 percent year-over-year, and up 40 percent from last quarter. Seattle and New York both saw annual gains of roughly 18 percent, but quarterly they diverged significantly, with Seattle falling 38 percent since March, and New York up 1 percent.

Washington, D.C., Los Angeles , and Boston, all experienced a striking reversal of post-pandemic recovery trends. Washington, D.C. had the sharpest year-over-year decline, down 26 percent year-over-year and 21 percent quarterly. The District is in an uphill battle with a broad segment of industry sectors having double-digit demand declines over the last year in addition to an uncertain future given a recently approved large reduction in federal spending and downsizing in headcount. LA had a sharp year-over-year decline of nearly 26 percent, and saw demand drop 23 percent quarterly. The city has faced serious headwinds in the first half of the year from catastrophic natural disasters, as well as political demonstrations, all of which are amid a backdrop of a streaming war that has cooled, and an entertainment industry still recovering from the 2023 strikes. Boston, after experiencing multiple quarters over the past year of new demand totaling 2M square feet or more, saw large tenants disappear from the market and had its worst quarter for demand in the post-pandemic period, leaving the city down 46 percent quarterly.

“It appears we’ve emerged into a more nuanced period of office demand, where external forces big and small appear to be dictating the direction of demand across both industries and metros,” said Ryan Masiello, Chief Strategy Officer of VTS. “The data today isn’t so simply distilled, with there being a high degree of variability when examining office demand across differing sectors and cities. What’s clear is that capital markets, geopolitical events, and hiring are the biggest drivers or deterrents for office strategy at the moment.”

Q2 2025 VTS Office Demand Index (VODI)

About VTS

VTS is the industry's only technology platform that unifies owners, operators, brokers, and their customers across the commercial and residential real estate ecosystems. In 2013, VTS revolutionized the commercial real estate industry’s leasing operations with what is now VTS Lease. Today, the VTS Platform is the largest first-party insights and collaboration engine in the industry, transforming how strategic decisions are made and executed by real estate professionals across the globe.

With the VTS Platform, consisting of VTS Lease, VTS Market, VTS Activate, and VTS Data, every stakeholder in real estate is given real-time market information and workflow tools to do their job with unparalleled speed and intelligence. VTS is the global leader, with more than 60% of Class A office space in the U.S., and 13 billion square feet of office, residential, retail, and industrial space is managed through our platform worldwide. VTS is utilized by over 45,000 professionals and over 1.2 million total users, including industry-leading customers such as Blackstone, Brookfield Properties, LaSalle Investment Management, Hines, BXP, Oxford Properties, JLL, and CBRE. To learn more about VTS, and to see our open roles, visit www.vts.com.

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