New Demand For US Office Space Falls For 3rd Straight Month
USA – The latest VTS Office Demand Index (VODI) showed that new demand for office space across the country declined for the 3rd straight month in August and fell to below 50 percent of its average pre-pandemic pace, reported GlobeSt on Thursday (29 September).
The overall VODI dipped by 6 points or 11 percent from 52 in July to 46 in August, the lowest level since February 2021.
Aside from that, Romer Debbas, a law firm specialising in New York City property said the office leasing market is unequivocally one of the most impacted by the COVID-19 pandemic.
“Companies have used this as an opportunity to downsize their space, relinquish their space and go fully remote or in some instances, even take on more space to capitalise on the opportunity to take advantage of a down market,” said Pierre Debbas, Managing Partner at the law firm.
“Now being in year 3 of this new world we live in, we are seeing the big corporations actually making a valiant attempt to require people to come back into the office. If successful, mid-sized and smaller companies may follow suit which will be beneficial to the rebound to the office leasing market.”
But while he believes that demand for office space will never return to its pre-pandemic level, Pierre thinks “the new reality of the office sector should be much more positive than it is presently.”
Year-over-year, the national VODI plunged 47.1 percent. As stated in recent VODI reports, the annual slump is not concerning in and of itself, as it reflects the so-called Post-Vaccine Wave of new office demand in 2021.
“During that wave, demand for office space that was pent-up during earlier stages of the COVID-19 pandemic entered the market in a short amount of time, resulting in a temporary burst of new demand in late spring and summer 2021,” explained VTS.
“The large year-over-year declines will temper as the Post-Vaccine Wave fully recedes behind the 12-month mark in October.”
Furthermore, VTS’ Chief Executive Nick Romito noted that it’s usual for office demand to slow down in the summer. What remains to be seen is if this downtrend will continue, or if the office demand level is simply settling into a new ‘post-pandemic normal’.