After years of sluggishness caused by persistent remote work trends, office demand in the tech sector surged in 2025, becoming the primary driver of growth in U.S. commercial real estate, according to the latest VTS Office Demand Index (VODI).
Tech-heavy markets like Seattle and San Francisco saw meteoric year-over-year gains—46% and 45%, respectively—while the national office market across all industries grew a modest 6% over 2024. Tech demand alone jumped 87%, underscoring how AI-driven companies are reshaping the office landscape.
“Red-hot growth from tech companies in the AI space defined office demand for the year,” said Nick Romito, CEO of VTS. “Cities that are major tech hubs, such as Seattle and San Francisco, benefitted the most, with office demand swelling considerably.”
Divergent Market Fortunes
The tech surge highlights stark differences across markets. New York remains the strongest overall, with a VODI of 77 (77% of its pre-pandemic average), while San Francisco has climbed to second place at 68. Seattle, despite recording the highest year-over-year growth, remains near the bottom with a VODI of 48 due to historically low demand levels.
Other notable shifts include Chicago, which led quarterly growth in Q4, finishing the year with a 43% increase versus 2024, and Boston, lagging at a VODI of 38 and experiencing a sharp 32% decline in Q4, although still achieving 15% annual growth. Notably, Boston and Los Angeles were the only major markets without meaningful increases in tech demand.
“Tech is the only industry seeing double-digit growth in demand, producing divergent fortunes across markets,” said Ryan Masiello, Chief Strategy Officer at VTS. “AI tenants are scaling faster and taking larger footprints earlier than in previous cycles, compressing timelines and forcing landlords to rethink how they bring space to market.”
Implications for the Office Market
The AI boom isn’t just changing who occupies space—it’s changing how space is leased and developed. Rapid scaling by AI-driven firms is compressing lease timelines and incentivizing landlords to adapt more flexible, tech-friendly offerings. Markets that have a high concentration of AI companies are reaping the benefits, while regions with fewer tech tenants are seeing slower growth or even decline.
For investors and landlords, the 2025 office market demonstrates the growing influence of technology and AI on urban commercial real estate, highlighting that recovery and growth post-pandemic are increasingly uneven and sector-specific.
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