Office demand in the U.S. presents a confusing picture today. In some cities, demand is strong. In others, it has slowed sharply from one quarter to the next. This leaves many landlords and developers struggling to figure out which way to move at a time when economic and political factors and new technologies are adding to the confusion.
Nationally, office demand was up just over 11% in 2Q 2025 compared to the previous year. Quarterly, it fell 1.4% from the first quarter. However, the broad national picture masks significant differences in outcomes, according to the latest VTS Office Demand Index (VODI).
Chicago and San Francisco were the clear leaders in the second quarter, seeing double-digit gains in office demand on both a quarterly and year-over-year basis. Demand in Chicago soared 60% compared to 2Q 2024 and 35% compared to this year’s first quarter. In San Francisco, demand rose 27% quarter-over-quarter and 27% year-over-year, buoyed by tech demand in AI. Seattle and New York both saw annual gains of 18%; in the second quarter, however, demand fell 38% in Seattle but rose 1% in New York.
In contrast, demand slumped in Washington, DC, Los Angeles and Boston.
In Washington, demand plummeted 26% year-over-year and 21% from 1Q 2025, except for association/non-profits and legal. “The District is in an uphill battle with a broad segment of industry sectors having double-digit demand declines over the last year in addition to an uncertain future given a recently approved large reduction in federal spending and downsizing in headcount,” VTS stated, adding that public sector demand and the industries correlated to it “have few growth prospects at present time.”
Los Angeles was impacted by natural disasters like the fires that devastated a portion of the city, as well as political demonstrations and an entertainment industry still recovering from work strikes in 2023. Office demand fell 26% year-over-year and 23% quarterly.
“Boston, after experiencing multiple quarters over the past year of new demand totaling 2M square feet or more, saw large tenants disappear from the market and had its worst quarter for demand in the post-pandemic period, leaving the city down 46 percent quarterly,” the report stated.
The different trends exhibited in the various markets occurred against a backdrop of confusion. In 2Q 2025, overall job postings fell 2.4% -- but office-using jobs grew by 47,000. Remote work – which some experts have predicted is on its way out – proved the opposite. Remote job postings increased from 6.7% to 7.8%. Unpredictable shifts in trade policy and geopolitical tensions increased uncertainty. In addition, office-using employers were trying to work out the short and long-term effects of AI on workforce productivity.
“It appears we’ve emerged into a more nuanced period of office demand, where external forces big and small appear to be dictating the direction of demand across both industries and metros”, said Ryan Masiello, chief strategy officer of VTS. “What’s clear is that capital markets, geopolitical events, and hiring are the biggest drivers or deterrents for office strategy at the moment.”
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