Office Interest Grows, But Activity Remains Slow

According to a monthly report from software provider VTS, demand for office space across major U.S.markets grew by 28% from February to March.

VTS’ Office Demand Index, which is largely based on the amount of office tours by potential tenants, saw a 160% spike during the first quarter as returning to the office seems more and more likely in the coming months.

However, despite interest in office space climbing, this has yet to translate to actual leasing activity.

“[Q1 was] just a continuation of what we had experienced the past few quarters,” said Steig Seaward, National Director of Research at Colliers. “Tenants are slow to return to the office. Nothing has really changed.”

This is also true of in-person work. Analysis from Kastle Systems found that office usage across the 10 largest U.S. markets averaged at 26% at the end of April, which is only a few points above the rate in mid-January.

Read Mortimer, Regional Director at Rubenstein Partners Sun Belt, noted that along with the increase in tours of their offices, leasing is just now becoming active as companies who were seeking office space prior to the pandemic resume their search.

“Across our portfolio, whether it’s corporate tenants, law firms or investment banks, Labor Day seems like the outside date for returning,” said Mortimer. “A lot has coalesced around the push for returning.”