Companies are not exactly hiring office workers in droves. They are still leasing offices anyway, and at the fastest pace since the pandemic.
The VTS Office Demand Index tracks new in-person and virtual office tours. It just hit its highest level since Covid first shut buildings down.
The index is also a leading sign for lease signings about a year out. It jumped 18% from Q4 2025 and 13% from a year earlier.
That is even as office jobs are still down 2% from 2022, per the BLS.
The easy story is AI. Tech firms are eating up space in San Francisco and other AI build-out hubs.
The less easy piece is who is joining them. VTS CEO Nick Romito said this quarter was led not just by tech but by finance and law firms stepping back into the market.
That is the kind of demand that has been missing from office for years. Banks and law firms tend to sign long leases on top space, and they do not chase short flex deals.
The rebound is local, not national. San Francisco and New York are leading the way.
Los Angeles is the surprise, with strong demand growth this quarter, driven by the creative field.
The other side of the map looks different. Boston was the worst market in the report after federal funding cuts hit life science firms that lease lab and office space.
Seattle, Washington DC and Chicago are also seeing demand pull back as job growth stalls.
The vacancy story is also messier than the headline. National office vacancy dipped to 22.2% in Q1, down 14 basis points from the prior quarter and 30 basis points from the peak in Q2 2025, per JLL.
But 10% of office buildings are now sitting on more than 60% of all empty space. Most of those are older, large buildings owned by cash-strapped owners.
For investors in office REITs, the report cuts two ways. Demand is on the rise, and lease signings should follow in 2026 and 2027.
The drop in office jobs may be a quiet help for landlords. With fewer open roles, firms have more room to push staff back to the office.
That, in turn, drives up the case for more space.
The pain is concentrated in a slice of older buildings that may not come back at all. The next round of big office headlines will come from those owners.
VTS chief strategy officer Ryan Masiello noted that the AI boom is still the main story. Cities that lack a tech hub or a strong second growth lever are the ones in decline.
Los Angeles is the test case. It posted a strong quarter on the back of the creative field. Masiello said it is too early to call that growth a real trend.
That is the bigger story for the year.
The cities with a hot tech base are leading, while the rest are flat or in the red.
