Office Demand Climbs to Post-Pandemic High Despite Shrinking Workforce Article originally posted on Globe St. on May 1, 2026 Office demand climbed to its highest level since before the pandemic in the first quarter, even as the workforce that typically drives it continued to shrink, revealing a growing disconnect between hiring trends and how companies are using space. The VTS Office Demand Index rose 18% quarter over quarter and 13% year over year, marking its strongest reading of the post-pandemic era, as leasing activity was fueled not only by the tech sector’s ongoing AI expansion but also by renewed demand from finance and legal tenants. The surge comes against a complicated economic backdrop, including geopolitical instability tied to the war in Iran and broader macroeconomic uncertainty. At the same time, office-using employment — a key demand driver — declined 0.5% year over year and remains down 2% since the end of 2022. That divergence suggests companies may be increasing in-office expectations and space utilization even as headcounts soften, giving employers greater leverage to push return-to-office policies. “Although tested against a turbulent backdrop, demand for office space has seen an exceptional start to the year, with remarkable double-digit quarterly and annual increases in demand,” said Nick Romito, CEO of VTS. “What perhaps is most notable about this quarter’s positive performance is that it was led not just by tech’s sustained AI boom – but also by finance and legal companies entering the market as well.” At the market level, however, performance remained uneven, with a handful of major coastal hubs continuing to pull ahead while others lagged or contracted. San Francisco and New York again stood out as leaders in the first quarter, alongside a resurgent Los Angeles. San Francisco posted the most dramatic gain, with demand surging roughly 70% quarter over quarter as the market continues to leverage its strength amid the AI boom. New York also delivered a strong showing, supported by broad-based growth across finance, legal and technology tenants, while Los Angeles saw demand rise 20% from the prior quarter, driven in part by a rebound in its influential creative sector. Elsewhere, the picture was less robust. Boston was flat on a quarterly basis but posted a steep 31% year-over-year decline, making it the worst-performing market in the report. Chicago posted the largest quarterly drop among major markets, with demand falling 11%, while Seattle and Washington, D.C., also saw quarterly contractions. Despite its quarterly decline, Seattle remained a relatively bright spot over a longer horizon, with demand up 44% compared with 2025 levels.