Tech Demand Broadens Across Major Office Markets as New York Overtakes San Francisco

National office demand eased in the second quarter following an exceptionally strong start to the year and remained above year-end 2025 levels as new demand entering the market continued to concentrate in markets with durable long-term demand drivers, according to the latest VTS Office Demand Index (VODI). The national VODI finished Q2 at 71, down 12 percent from the prior quarter. Even with the quarterly slowdown, office demand remained 9 percent above year-end 2025 levels, reflecting a recovery that continues to be driven by demand increasingly centered in the nation’s highest-demand office markets.

The broader forces shaping the market remained largely unchanged. Technology continued to drive national activity, helping propel New York past San Francisco as the nation’s strongest office market. Trailing 12-month technology demand increased 88 percent year-over-year by square footage and 44 percent by requirement count, while average deal size increased from approximately 14,500 square feet to 19,000 square feet. Although national technology demand declined quarter-over-quarter, the slowdown was largely driven by San Francisco following its record first quarter. Excluding San Francisco, technology demand increased 19 percent from the prior quarter, reinforcing continued strength across the broader market as AI investment remained robust.

“Office recovery is entering a new phase where demand is becoming increasingly concentrated in markets with long-term growth drivers,” said Nick Romito, CEO of VTS. “While quarterly fluctuations are a natural part of the leasing cycle, companies continue to prioritize markets with the strongest long-term fundamentals, widening the gap between market leaders and those still searching for sustained demand.”

The second quarter further underscored the widening gap between office markets. New York emerged as the nation’s strongest office market, supported by a 113 percent year-over-year increase in technology demand despite slower finance demand, while San Francisco remained second overall with trailing 12-month technology demand up 161 percent year over year even after cooling from record first quarter activity. Washington, D.C. posted the strongest annual VODI growth among tracked markets, rising 45 percent year-over-year as government demand reached its highest level since the pandemic. Los Angeles continued to gain momentum through creative, professional services and legal tenants rather than technology.

Elsewhere, performance remained more subdued. Boston recorded a 23 percent year-over-year improvement but continued to rank near the bottom of the index, while Chicago and Seattle experienced the sharpest declines among tracked markets. Chicago’s late-2025 rebound was short-lived as renewed large-block demand proved to be temporary, and Seattle continued to face softness across finance and healthcare demand despite ongoing technology demand.

“This quarter’s results reinforce that office demand is increasingly shaped by local market dynamics rather than broad national trends,” said Ryan Masiello, Chief Strategy Officer of VTS. “New York’s rise to the top of the rankings, Washington, D.C.’s government-driven momentum and San Francisco’s continued strength demonstrate that the strongest office markets are increasingly defined by the industries driving local demand.”

About VTS

VTS is the only AI-driven technology platform enabling intelligent real estate by unifying industry professionals, investors, and their customers at scale. In 2013, VTS revolutionized commercial real estate leasing operations with what is now VTS Lease. Today, VTS is the largest first-party insights and collaboration engine in the industry, transforming how strategic decisions are made and executed by the real estate industry globally.

With the VTS Platform, consisting of VTS 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 the platform worldwide. VTS is utilized by over 45,000 professionals and over 1.2 million total users each day, including industry-leading customers such as Blackstone, Brookfield Properties, LaSalle Investment Management, Hines, BXP, Oxford Properties, JLL, and CBRE.

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