Tech companies drive record office demand in major U.S. cities
NEW YORK, UNITED STATES — In a notable shift for tech-heavy regions, demand for office space in cities like Seattle, Boston, and San Francisco surged over the past year, signaling that tech companies are re-evaluating their office space strategies.
According to the Q3 2024 VTS Office Demand Index (VODI), these cities have recorded double and triple-digit growth in office demand, reversing a trend of lagging behind less tech-dependent markets.
Tech hubs lead U.S. office space growth in 2024
| City | Year-over-Year Growth |
| Seattle | 114.3% |
| Boston | 31.4% |
| San Francisco | 25% |
| Chicago | 14.9% |
| Los Angeles | 8.1% |
| New York City | 3.4% |
Seattle emerges as the frontrunner with a 114.3% increase in new office demand, followed by Boston at 31.4% and San Francisco at 25%.
This increase is seen as tech employers begin exploring hybrid and part-time office return policies, marking a departure from the remote work norms embraced widely during the pandemic.
On the other hand, traditional business centers like New York City and Los Angeles showed more modest gains of 3.4% and 8.1% respectively.
“Tech giants like Amazon, Salesforce, and Apple are making strategic moves toward bringing employees back to the office, following months of careful planning and office space evaluations,” Nick Romito, CEO of VTS, explained.
“The VODI data reflected this shift starting in early-2024, and the trend shows no sign of slowing down. I anticipate more companies will announce their return-to-office plans in the coming quarters.”
Election uncertainty slows Washington, D.C. market
While most markets show positive momentum, Washington, D.C. stands as an outlier with the lowest demand index of 35. The political uncertainty surrounding the upcoming presidential election has created hesitancy among potential tenants, who are postponing their office space decisions until after the electoral outcome.
“Each city has its own unique factors driving or stalling office demand, and the Q3 VODI captures that complexity,” said Ryan Masiello, Chief Strategy Officer of VTS.
“Washington, D.C. stands out as the only market where office demand has significantly declined, and it’s no surprise that the upcoming presidential election is causing some hesitancy among tenants.”
“On the flip side, major markets like Los Angeles and New York City continue to hold the top spots for office demand, even with a recent cooling, underscoring their enduring appeal with employers,” Masiello added.
The national office demand picture shows an 11.8% increase compared to Q3 2023, though there’s been an 8.1% decrease from the previous quarter. This quarterly dip aligns with typical seasonal patterns.
The gap between tech-centric and traditional markets has notably narrowed, shrinking from 27 points in January 2024 to just 11 points currently, suggesting a more balanced market recovery across different sectors.
The VODI, which tracks new tenant tours of office properties in major U.S. cities, is the first commercial real estate index designed specifically to measure real-time tenant demand, making it a critical tool for identifying leasing activity trends.
