The demand for office space in Seattle is the lowest among all cities measured in a new report from VTS, a commercial real estate technology platform.
The VTS Office Demand Index (VODI) report released this week shows Seattle experienced the greatest quarterly decline in demand for office space, with a 43% drop quarter-over-quarter and 52% drop year-over-year.
According to VTS, VODI tracks unique new tenant tour requirements of office properties in core U.S. markets. It’s intended to serve as an early indicator of upcoming office leasing activity and track new tenant demand.
The report measured demand in Seattle, Los Angeles, San Francisco, Boston, Washington, D.C., New York City and Chicago. National demand for office space at the end of the third quarter was just half of the pre-pandemic levels.
The reports says that Seattle’s decline was led by a historically abnormal three-month absence of demand from tenants seeking the largest office spaces of 50,000 or more square feet. Tenants seeking mid-sized office spaces of 10,000-50,000 square feet were up during the period, “preventing an all-out crash in demand,” the report said.
“Seattle’s very low demand for office space is more reminiscent of the beginning of the pandemic than any other time, and it doesn’t appear to be changing soon,” Ryan Masiello, chief strategy officer of VTS, said in a news release. “The last and only other time we saw an absence of tenants seeking large spaces was during the beginning of the pandemic lockdown.”
Masiello added that the Seattle area’s dense population of tech jobs, which are amenable to working from home, has made it difficult to rebound. Another report, from JLL, said the commercial real estate market in the Seattle region continues to see record high vacancies.
“It will likely take some of the big area employers pushing harder for return-to-office, such as Microsoft and Amazon, to reverse this trend,” Masiello said.
Elsewhere in the country, the report points to signs of stability around office demand, despite persistent headwinds such as a cooling job market and ongoing remote work.
Los Angeles experienced the greatest growth despite months-long writer and actor strikes in Hollywood. The city’s demand for spaces greater than 50,000 square feet is now higher than at any time since June 2021.
