Q1 2024 Sees Record Office Tour Demand Post-Pandemic Surge

U.S. Office demand has rebounded to its highest level since the onset of the Covid-19 pandemic, signaling a potential turning point for the commercial real estate sector after years of sluggish activity. According to the VTS Office Demand Index, new in-person and virtual office tours reached their peak in the first quarter of 2026, marking the strongest quarterly performance since early 2020. The index, which tracks tenant interest in office spaces across major U.S. Markets, provides one of the earliest indicators of leasing momentum, and its latest reading suggests a cautious but tangible recovery.

Leasing Activity Shows Signs of Stabilization

The uptick in office tours aligns with broader data from commercial real estate firms, which report that leasing activity is gradually improving after a prolonged downturn. CBRE, the world’s largest commercial real estate services company, noted in its first-quarter 2026 report that more than 56 million square feet of office space was leased nationwide—the strongest first-quarter performance in four years. While the overall vacancy rate remains elevated at 18.6%, it represents a slight improvement from previous quarters, with prime office buildings seeing significantly lower vacancy rates of 12.7%.

Stefan Weiss, head of U.S. Office research at CBRE, described the market as experiencing “stability really kind of creeping its way into recovery.” The firm projects that annual leasing activity in 2026 will surpass pre-pandemic levels, driven in part by a sharp reduction in new office construction. With virtually no new supply entering the market, existing spaces are absorbing demand more efficiently, helping to balance supply and demand dynamics.

Hybrid Work Continues to Reshape Demand

Despite the rebound in office tours, the recovery remains uneven, with hybrid work policies continuing to influence tenant behavior. The VTS Office Demand Index does not measure actual lease signings but rather tenant interest, which has been bolstered by companies seeking to optimize their office footprints for flexible work arrangements. Newmark, a global commercial real estate advisory firm, reported in its Q1 2024 analysis that office-using employment—jobs in sectors such as technology, media, and professional services—remains 6% above January 2020 levels. However, growth in these sectors has slowed, with employment contracting in 31 of the top 50 U.S. Office markets over the past six months.

The shift toward hybrid work has also led to a bifurcation in the market, with high-quality, amenity-rich buildings outperforming older, less desirable properties. CBRE’s Weiss noted that if underperforming “zombie buildings”—structures with persistently high vacancy rates—are repurposed or demolished, the national vacancy rate could drop to around 13%, closer to pre-pandemic norms. Some of these buildings are being converted into residential units, hotels, or industrial spaces, while others are being demolished entirely.

Regional Disparities Persist

The recovery in office demand is not uniform across the U.S., with some markets rebounding faster than others. Newmark’s Q1 2024 report highlighted that all regions experienced occupancy declines in early 2024, with the East Coast suffering the steepest drop—a net loss of 7.6 million square feet. Meanwhile, tertiary markets have seen asking rents rise by 1.1% year-over-year, defying traditional supply-and-demand dynamics. Concessions, such as rent-free periods and tenant improvement allowances, remain elevated compared to pre-pandemic levels, effectively lowering the cost of leasing for tenants.

Major coastal markets, including New York City, San Francisco, and Los Angeles, continue to face challenges due to high vacancy rates and elevated construction costs. However, secondary markets with lower barriers to entry and more affordable rents are attracting tenants seeking cost-effective alternatives. The divergence underscores how the pandemic has accelerated pre-existing trends, such as the decentralization of office demand away from traditional business hubs.

What Comes Next?

The rebound in office tours suggests that tenant interest is gradually translating into leasing activity, though the pace of recovery remains slow. CBRE’s projection that 2026 leasing volumes will exceed 2019 levels hinges on several factors, including the trajectory of hybrid work policies, interest rate movements, and the broader economic outlook. If the Federal Reserve begins cutting rates later this year, as some analysts expect, borrowing costs for commercial real estate could decline, potentially spurring further investment.

For now, the market appears to be in a transitional phase, with stability replacing the volatility of the past four years. As Weiss put it, “What we’re really seeing is slow and steady office demand, coupled with virtually no new supply.” While the road to full recovery remains long, the latest data offers a glimmer of optimism for an industry that has weathered unprecedented disruption.

This report is based on data from the VTS Office Demand Index, CBRE’s Q1 2026 U.S. Office Market Report, and Newmark’s Q1 2024 U.S. Office Report.