Cities With More Remote-Friendly Jobs See Slower Office Market Recovery

Office markets in cities with a greater percentage of remote-friendly jobs are recovering more slowly than in cities with fewer such jobs, reported VTS, New York.

For example, Seattle, Boston and San Francisco have higher than average rates of remote-friendly jobs, and office demand has recovered less in those markets than elsewhere, VTS reported. With relatively fewer remote-friendly jobs, Chicago, Los Angeles and New York have seen more pronounced recoveries, the June VTS Office Demand Index reported. The VODI tracks in-person and virtual tenant tours of office properties across the country to determine tenant demand.

“The pandemic didn’t just change the way we work; it changed the way we live,” said Nick Romito, CEO of VTS. “Many workers have found value in remote or hybrid work and may be reluctant to go back to the way life was pre-pandemic.”

Romito said in cities with higher rates of fully remote jobs, “hiring and retaining talent means employers will need to provide choices and flexibility–including fully-remote and fully in-office.”

Washington, D.C., presents one exception to the pattern with a high rate of remote-friendly jobs and a further-along recovery, but VTS noted government employers who may be less willing to keep remote work arrangements in place compared to employers in Seattle, Boston and San Francisco.

Nationally, demand for office space took a breather in May following a particularly sharp burst of recovery early in the year, VTS reported. After rising 173 percent in the first four months of the year, demand for office space receded modestly in May, down 8.5 percent from April. The decline was likely fueled by a seasonal lull and an easing of pent-up demand and signifies a reversion to office demand’s normal “see-sawing” behavior, the report said.

“Demand for office space tends to follow seasonal patterns; it should not be concerning that most markets saw demand for office space taper in May,” said VTS Chief Strategy Officer Ryan Masiello. “Depending on the market, we anticipate that demand will continue to fluctuate this summer before rising again in August and September.”