Tag Archives: Commercial

Demand for Office Space Up Year-over-Year for the Sixth Straight Month

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Spurred by growth from large tenants, both New York City and Los Angeles experienced significant growth in demand, according to the Q4 2023 VTS Office Demand Index (VODI) quarterly report

New York, NY – January 31, 2024 (BUSINESS WIRE) Nationally, demand for office space rose in December on a year-over-year basis, marking the sixth consecutive month of annual growth and giving new life to the office market. This trend reversal follows 15 consecutive months of monthly annual declines in demand for office space, according to the quarterly VTS Office Demand Index (VODI). The VODI tracks unique new tenant tour requirements of office properties in core U.S. markets, and is the earliest available indicator of upcoming office leasing activity as well as the only commercial real estate index to explicitly track new tenant demand.

Nationally, the VODI increased to 55, marking a 19.6 percent year-over-year and 7.8 percent quarter-over-quarter rise in demand for office space. Aside from the immediate decline in demand during the heart of the COVID-19 pandemic, the national VODI bottomed out in December 2022 at 44 and has trended upward since.

Likely spurring the trend reversal is positive economic data easing recession fears and stabilizing work-from-home rates. Combined, the two indicators have reduced uncertainty and injected confidence in the minds of employers with regard to committing to new office space.

“The first step in the recovery of the office market is to stop the bleed, and according to our data, we likely have. However, it is still too early to call a bottom nationally,” said Nick Romito, CEO of VTS. “Today, the office market is stable, but it is also fragile. While the cards are stacked in favor of a slow but steady recovery, it wouldn’t take much to startle employers again and pause any upward momentum.”

Locally, both New York City and Los Angeles experienced impressive annual growth on an already elevated base, up 38.9 percent and 46.8 percent, respectively, and up 21 and 22 points, respectively. In both cities, the demand was driven by an increase in tenants looking for large spaces (greater than 50,000 sq.ft.). Of cities covered by the report, New York City is closest to its pre-pandemic normal, reaching a VODI of 75, followed closely by Los Angeles at 69.

“Among all cities, New York City and Los Angeles have been the leaders in paving the way to recovery for quite some time. As they get closer to their eventual normal, it becomes harder to see large jumps in demand, but both cities did just that. It is sustained and remarkable,” said Ryan Masiello, Chief Strategy Officer of VTS. “Employers in New York City and Los Angeles are assessing their needs, looking into their crystal ball and making bullish bets on their future.”

In the tech-heavy cities of Seattle and San Francisco, both hit hard by the shift to work-from-home and struggling at the bottom of the pack, the data shows that the mix of who is filling their office space in the future may look different than it did before the pandemic. For example, in Seattle, the share of demand coming from the “third sector” has nearly doubled since January 2020, right before the pandemic, while in San Francisco, it is up 69.3 percent over the same period. Note, that “third sector” refers to any tenants that are outside the TAMI and FIRE sectors.

Q4 2024 VTS Office Demand Index (VODI)

NationalBOSCHIL.A.N.Y.C.S.F.SEAD.C.
Current VODI Dec./Q4)5539456975343444
Quarter-over-Quarter VODI Change (%)7.8%11.4%-4.3%-6.8%27.1%-15%61.9%0%
Quarter-over-Quarter VODI Change (pts.)44-2-516-6130
Year-over-Year VODI Change (%)19.5%39.3%-10%46.8%38.9%9.7%-12.8%-22.8%
Year-over-Year VODI Change(pts.)911-522213-5-13

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 ofVTS 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.

Contacts

Media:
Eric Johnson
VTS
eric.johnson@vts.com

Lauren Riefflin
Kingston Marketing Group
lauren@kingstonmarketing.group

Jullieanne Cueto
Marino
jcueto@marinopr.com

Growing Your Customer Base with Video & TV Advertising (Infographic)

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It is no secret that TV advertising is one of the most common ways for businesses to get their products in front of their target audience. By complementing that approach with social media, you can amplify your campaigns. This infographic from Toast TV takes a look at how businesses can grow their customer base with video and TV advertising:

NAR Chief Economist Offers Commercial Real Estate Market Forecast

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Washington. D.C. – May 9, 2023 (nar.realtor) National Association of Realtors® Chief Economist Lawrence Yun presented an overview of U.S. commercial real estate Tuesday as part of the 2023 REALTORS® Legislative Meetings(link is external). Yun emphasized challenges facing the commercial real estate market brought on by tightening lending policies among many small and regional banks, which have been a key source of commercial loans. Still, due to continuing U.S. job gains, net absorption has been mostly positive nationwide, Yun said, with the apartment, industrial and retail sectors helping to keep the industry relatively stable. 

“The performance of commercial real estate markets will vary across the country,” Yun projected during Tuesday’s Commercial Economic Issues and Trends Forum(link is external). “Markets with strong job gains will naturally hold on much better, while those with weaker job conditions will struggle to raise net occupancy.”

Yun said America’s apartment sector recorded 116,000 net positive absorptions in the past year, while the industrial and retail sectors added 361 million square feet and 64 million square feet, respectively, over the last 12 months. Office markets, however, saw a reduction in net absorption by 29 million square feet over the same period. 

“The national office market will continue to see rises in vacancy rates due to falling demand,” Yun added. “The apartment sector will record a modest uptick in vacancy due to robust new supply.”

With the impact of mortgage interest rates on the housing market in focus throughout the week at NAR’s conference in D.C., Yun addressed the implications of Fed decisions on nationwide commercial markets.

“The Federal Reserve’s aggressive rate hikes have damaged balance sheets for regional and local banks, an important source of commercial real estate loans,” he said.

Yun estimated that continual rises in rates will in part cause commercial real estate transaction volume to decline by 27% overall in 2023.

“The lack of capital, higher costs of financing and refinancing, and the weakening economy will contribute to a lower overall valuation of commercial real estate prices,” Yun said. “Weaker prices will mean opportunities for those with deeper pockets to get deals done in the months and years ahead.”

Yun added that appraisal values have fallen by an average of 15% from peaks in early 2022.

The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics.

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