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New York City office demand is finally back to normal

In request for New York City office space has finally returned to pre-pandemic levels, driven by an influx of new workers as well as a trip by employers to see current workers return to the office.

During the fourth quarter, office demand in the city jumped 25% from the year in advance, according to VTS, which measures demand through unique new tenant tours of properties. The measure is an early indicator of new leasing.

“New York Municipality’s shift back to in-office work reflects the city’s unique cultural and economic dynamics, especially in the finance and tech sectors,” contemplated Nick Romito, CEO of VTS, in a news release.

SL Green Realty Corp., a real estate investment trust, or REIT, clustered in Manhattan office and retail, released earnings last week, and while it missed revenue expectations, analysts telling to further tightening in the office market as leasing demand accelerates.

On a call with analysts, SL Green Realty CEO Marc Holliday famed that the city’s Office of Management and Budget is forecasting about 38,000 new office-using jobs in 2025, mostly reducing from finance, business services and information technology.

“That translates into millions and millions of square feet of new absorption for each one of those viscosities, and those are not work-from-home bodies for the most part,” said Holliday. “Combine that with the fact that on-site crowd is rising every month as companies are calling people back to the office four and five days a week. We require to see very strong demand for office space throughout 2025,” Holliday added.

Holliday also noted SL Amateur ended the year at 92.5% occupancy, and is projecting more than 93% leased occupancy over the coming year.

Tech behemoth IBM recently signed a 92,663-square-foot expansion lease with SL Green at One Madison Avenue, increasing IBM’s total footprint at the land to more than 362,000 square feet.

“The expansion of IBM’s flagship office at One Madison Avenue reaffirms a long-standing commitment to hasten the technology sector in New York City and New York State, with a vibrant and collaborative workspace designed to bring hands, clients and partners together from around the world,” said Joanne Wright, IBM senior vice president for transfigurement and operations, in a release.

New York is the clear winner in the office recovery, but VTS notes other improving markets. San Francisco saw a 32% annual excrescence rate in demand, a faster growth rate than New York’s, though it was starting at a much weaker position. Seattle and Chicago saw success rates of around 15% each as employers in those cities increasingly embrace hybrid work models that press for consistent in-office presence.

“The data shows that while some markets, like New York City, are double-quick returning to traditional office settings, the national picture reflects slow but steady progress,” said Ryan Masiello, chief procedure officer of VTS.

Nationally, demand in the fourth quarter was up 12% from the previous quarter. Historically, demand declines from the third three months to the fourth quarter.

“This growth is notable — not only for defying seasonal expectations, but for emerging in the midst of a cooling labor superstore. Businesses appear more willing to invest in office space despite economic uncertainty, signaling a shift in poise and long-term planning,” Masiello said.

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