\nAfter several months of increasing demand for office space across the United States, the emerging recovery has stalled amid a resurgence of COVID-19 and continued economic uncertainty, although demand for leased office space is markedly higher than it was at its lowest point just after the pandemic began. This is according to the new VTS Office Demand Index (VODI)<\/a>, which tracks tenants of office properties entering the market across the nation, and shows demand for office space is still down 56.4 percent from February 2020 pre-pandemic levels.\n<\/p>\n
\nVTS announced that the VODI would be made available moving forward on a bi-monthly basis. The VODI<\/a> is the earliest available indicator of forthcoming office leases and tenant sentiment, locally and nationally1<\/sup>, and represents up to 99% of new demand for office space in seven major markets, including New York, Washington, D.C., Los Angeles, Chicago, Boston, Seattle and San Francisco.\n<\/p>\n \nPre-COVID-19, the national VODI was consistently around 100 with some seasonal variation for roughly two years, demonstrating the stability of national office demand pre-crisis.\n<\/p>\n \nIn February 2020, just prior to the stay-at-home orders that swept the nation in March 2020, the national VODI index value was 94. Three months later, in May 2020, the VODI had declined by 84 percent to an index value of 15. Coming off the bottom, demand initially increased steadily at a rate of around 7 index points a month from June through September, but in October, slightly reversed course and fell by 1 index point to an index value of 41, a signal that a full recovery will likely take time.\n<\/p>\n \n\u201cThis is, by far, the worst contraction in recent history for the office market as businesses grapple with a global pandemic,\u201d said VTS CEO and co-founder Nick Romito. \u201cWhile we started to see some signs of life over the summer, businesses experienced a second wave of uncertainty in October due to resurgence of the virus, the elections and the markets. We expect it\u2019s going to be a bumpy ride for months to come, although we\u2019re confident in a long-term recovery.\u201d\n<\/p>\n The local race to recovery<\/b><\/p>\n \nMarket-by-market, there is a wide disparity in demand for office space among the areas covered by the VODI.\n<\/p>\n \nThe Los Angeles market performed the best, and by October 2020, had gained back 69 percent of the demand lost after stay-at-home orders were issued in March 2020. Los Angeles logged the highest October VODI at 72, up from 14 in May, but down from 98 in February.\n<\/p>\n \nSan Francisco however, hasn\u2019t shared in the same success. The market was already suffering from decreasing demand prior to COVID-19, and, between March 2019 and February 2020, the San Francisco VODI had fallen from 125 to 55. After the pandemic hit, the San Francisco VODI plummeted to 4 and today has increased to 13 logging flat or negative growth over the last two months.\n<\/p>\n \n\u201cCalifornia is the tale of two markets. Los Angeles, propped up by the stability of the creative industry, is rebounding well and should continue to thrive as long as the new safer-at-home order is able to mitigate a resurgence in COVID-19. If it doesn\u2019t, Los Angeles could once again see a fall in demand,\u201d said VTS Chief Strategy Officer and co-founder, Ryan Masiello. \u201cSan Francisco, on the other hand, started to experience an exodus of tech companies leaving for cheaper rent elsewhere in 2019 and COVID-19 has only compounded the problem. We fully expect the polar market-by-market recovery to continue to be driven by the health of the cities\u2019 core industries and their respective ability to control the spread of COVID-19.\u201d\n<\/p>\n Table: VTS Office Demand Index (VODI)<\/b><\/p>\n February Trough Trough February 2020 Current VODI from Month-to- \nNational\n<\/p>\n<\/td>\n \n94\n<\/p>\n<\/td>\n \nMay 2020\n<\/p>\n<\/td>\n \n15\n<\/p>\n<\/td>\n \n-84.0%\n<\/p>\n<\/td>\n \n41\n<\/p>\n<\/td>\n \n-56.4%\n<\/p>\n<\/td>\n \n-1\n<\/p>\n<\/td>\n<\/tr>\n \nBoston\n<\/p>\n<\/td>\n \n94\n<\/p>\n<\/td>\n \nApril 2020\n<\/p>\n<\/td>\n \n27\n<\/p>\n<\/td>\n \n-71.3%\n<\/p>\n<\/td>\n \n36\n<\/p>\n<\/td>\n \n-61.7%\n<\/p>\n<\/td>\n \n-2\n<\/p>\n<\/td>\n<\/tr>\n \nChicago\n<\/p>\n<\/td>\n \n57\n<\/p>\n<\/td>\n \nApril 2020\n<\/p>\n<\/td>\n \n10\n<\/p>\n<\/td>\n \n-82.5%\n<\/p>\n<\/td>\n \n28\n<\/p>\n<\/td>\n \n-50.9%\n<\/p>\n<\/td>\n \n-1\n<\/p>\n<\/td>\n<\/tr>\n \nLos Angeles\n<\/p>\n<\/td>\n \n98\n<\/p>\n<\/td>\n \nMay 2020\n<\/p>\n<\/td>\n \n14\n<\/p>\n<\/td>\n \n-85.7%\n<\/p>\n<\/td>\n \n72\n<\/p>\n<\/td>\n \n-26.5%\n<\/p>\n<\/td>\n \n12\n<\/p>\n<\/td>\n<\/tr>\n \nNew York City\n<\/p>\n<\/td>\n \n126\n<\/p>\n<\/td>\n \nMay 2020\n<\/p>\n<\/td>\n \n8\n<\/p>\n<\/td>\n \n-93.7%\n<\/p>\n<\/td>\n \n42\n<\/p>\n<\/td>\n \n-66.7%\n<\/p>\n<\/td>\n \n-5\n<\/p>\n<\/td>\n<\/tr>\n \nSan Francisco\n<\/p>\n<\/td>\n \n55\n<\/p>\n<\/td>\n \nMay 2020\n<\/p>\n<\/td>\n \n4\n<\/p>\n<\/td>\n \n-92.7%\n<\/p>\n<\/td>\n \n13\n<\/p>\n<\/td>\n \n-76.4%\n<\/p>\n<\/td>\n \n-3\n<\/p>\n<\/td>\n<\/tr>\n \nSeattle\n<\/p>\n<\/td>\n \n86\n<\/p>\n<\/td>\n \nApril 2020\n<\/p>\n<\/td>\n \n10\n<\/p>\n<\/td>\n \n-88.4%\n<\/p>\n<\/td>\n \n42\n<\/p>\n<\/td>\n \n-51.2%\n<\/p>\n<\/td>\n \n-2\n<\/p>\n<\/td>\n<\/tr>\n \nWashington D.C.\n<\/p>\n<\/td>\n \n116\n<\/p>\n<\/td>\n \nMay 2020\n<\/p>\n<\/td>\n \n29\n<\/p>\n<\/td>\n \n-75.0%\n<\/p>\n<\/td>\n \n67\n<\/p>\n<\/td>\n \n-42.2%\n<\/p>\n<\/td>\n \n2\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n \nNew York City had the highest VODI pre-COVID-19 at 126 in February 2020 after a strong 2019. The market, however, was hard-hit by the virus and had the second lowest trough with a VODI of 8 \u2013 the largest contraction of any market covered with a decline of 93.7 percent over three months. While the bottom was extreme, New York City had a sharp initial rebound, jumping 9 points in June and 14 points in July to a VODI of 31 \u2013 a pace not matched by other markets until September. The market is far from recovered, however, with October demand in New York City one-third of pre-crisis highs.\n<\/p>\n \nWashington D.C. and Seattle have both experienced significant recoveries since the pandemic began to affect the office market. Washington D.C. was the most stable of all the markets during the initial months of COVID-19 and today is down 42.2 percent to a VODI of 67 from February 2020 when it logged a VODI of 116. Seattle is down 51.2 percent to a VODI of 42 from a stable February 2020 VODI of 86. However, in October, Seattle experienced a 2-point drop compared to Washington D.C.\u2019s two point gain.\n<\/p>\n Demand for Trophy and Class A office space in New York City jumps<\/b><\/p>\n \nWhile demand for office space remains depressed in much of the country, there is a silver lining for tenants shopping in New York City. Over the past several months the demand for Trophy and Class A office space in New York has risen and now accounts for about 70 percent of all office tours. By comparison, in the months leading up to New York\u2019s stay-at-home orders coming into effect, tours of Trophy and Class A office space made up a little over half (55 percent) of the tours, a sign that COVID-19-induced vacancies and lower rents have brought new tenant interest.\n<\/p>\n \nDownload the full VTS Office Demand Index Report with detailed methodology here<\/a>.\n<\/p>\n 1 The VTS Office Demand Index is a smoothed but not seasonally adjusted view of the total square feet toured in a given month by tenants with active requirements for office space. To control for new construction and VTS\u2019 own growth into a market leader, this total square footage is normalized against the total property square feet tracked in VTS\u2019 expansive network of leasing, marketing, and asset management software. To enhance comparability across regions, VODI is reported as an indexed value from the base month, January 2018.<\/sup><\/p>\n<\/td>\n<\/tr>\n About VTS<\/b><\/p>\n \nVTS is commercial real estate\u2019s leading leasing, marketing and asset management platform where the industry comes to make deals happen and real-time data comes to life. The VTS Platform captures the largest first-party data source in the industry, which delivers real-time insights that fuel faster, more informed decision making and connections throughout the deal and asset lifecycle. VTS Data, the industry\u2019s only forward-looking market dataset, and VTS Market and Marketplace, the industry\u2019s first integrated online marketing solution, give landlords, brokers, and tenants unparalleled visibility into real-time market information and the direct connectivity to execute deals with greater speed and intelligence at every point in the planning, marketing, leasing, and asset management cycle.\n<\/p>\n \nMore than 60% of Class A office space in the US and 12B square feet of office, retail, and industrial real estate globally is managed on the VTS platform. VTS\u2019 user base includes over 45,000 CRE professionals including respected industry leaders like Blackstone, Brookfield Properties, LaSalle Investment Management, Hines, Boston Properties, Oxford Properties, JLL, and CBRE. To learn more about VTS, and to see our open roles, visit www.vts.com<\/a>.\n<\/p>\n View source version on businesswire.com: <\/span>https:\/\/www.businesswire.com\/news\/home\/20201201005701\/en\/<\/a><\/span><\/p>\n Media:\n
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\n \n \n ______________________<\/td>\n<\/tr>\n<\/table>\n <\/p>\n
\n<\/b>
Alison Paoli
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Kingston Marketing Group
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alison@kingstonmarketing.group<\/a><\/p>\n
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