Jun 13, 2025

| Membership (fee-based) Share getty Five years have passed since Covid-19 brought the world to a standstill, yet the ripple effects continue to reshape our economy in ways that are still unfolding as the challenges and transformations continue to evolve. The office market is undergoing a recovery, though the pace and nature of this rebound differ greatly across cities and industries. According to the 2025 Leasing Prediction Outlook from my company, VTS, national demand for office space grew by nearly 20% in the U.S. in 2024, signaling the beginning of a broader recovery. This upward trajectory is expected to continue throughout 2025, but the journey will vary depending on what global markets you examine. New York has experienced an incredible rebound, and San Francisco, with its tech-centric economy, is poised for post-Covid record-breaking growth. London, on the other hand, has a much more muted outlook. These disparities highlight not only the speed of recovery but also the unique challenges and opportunities that lie ahead in the office market. While each city offers a different snapshot of recovery, they reveal how industry mix, company strategy and shifting employee expectations are all connected. Understanding these patterns, we can get a clearer picture of the broader evolution taking place across the global office landscape. Growth, Challenges And Industry Shifts New York has reasserted itself as the nation’s leader in office demand, with leasing activity projected to reach 34 million square feet (MSF) in 2025. After a strong rebound, growth is now stabilizing. These mandates also reflect a broader tension between leadership expectations and employee preferences, prompting companies like Amazon and AT&T to rethink office environments —not just enforce attendance—to maintain retention and performance. The 2025 Leasing Prediction Outlook highlights that San Francisco is on track for a notable recovery, led by a 28% increase in leasing activity in 2025. This rebound—driven by the tech and AI sectors , including companies such as OpenAI and Anthropic—is restoring confidence in a market hit hard during the pandemic. Return-to-office (RTO) initiatives and talent growth in emerging sectors like AI are playing key roles in the city’s resurgence. In contrast, leasing activity in London is expected to decline by 11% in 2025. These headwinds reflect broader global uncertainties, as many companies weigh long-term commitments in an era of high borrowing costs, evolving hybrid norms and increasing pressure to optimize real estate portfolios. Beginning 2025 With A Strong Finish To 2024 While New York and San Francisco saw jumps in leasing activity for accelerated growth in 2025, London experienced a modest decline in 2024, leading to a more cautious outlook. Broader economic shifts—such as potential interest rate cuts—could help unlock new demand in the second half of the year, but uncertainty remains a defining feature of today’s office landscape. Meanwhile, there’s growing recognition that office space is no longer viewed purely through the lens of square footage. For many organizations, it’s becoming a strategic tool to reinforce culture, drive accountability and strengthen team cohesion—particularly in industries where in-person performance is critical. Tech, however, continues to trail behind other industries in embracing RTO. The slower pace reflects an industry still in strategic flux, where many tech firms are reevaluating not just space needs but fundamental questions about their operating models and organizational design. What’s Next? The RTO trend remains a central force in shaping office demand. However, the 2025 Global Workplace Report by VTS reveals a disconnect: 79% of tenants feel their current office setups aren’t conducive to collaboration. Moving forward, success won’t hinge solely on location or mandates but on how well workplaces are redesigned to foster connection, innovation and purpose. For certain areas, the path forward may be slower, but it’s not without promise. A Centre for Cities report shows London and Toronto have the lowest in-office attendance among peer cities—just 2.7 days per week on average—yet London’s diverse industry base helps cushion its downturns. As economic conditions improve, not only London—but cities across North America and Europe—will need to balance short-term occupancy challenges with long-term shifts in how and where people work. Looking ahead, the tech sector still has a ways to go in the office market recovery. Tech remains one of the largest industries resistant to in-person work , and this is a trend to watch in the months to come. If the office market is going to make a true sustained recovery, tech companies must continue to emphasize the importance of their in-office presence. To do this, companies must make coming into the office as frictionless as possible. Increasing employee office traffic means ensuring that the experience of coming to work is simple. This can be approached through technology investments as well as by developing an in-person culture that values collaboration. Above all, the value of coming into the office—even on a hybrid schedule—should be highlighted as critical in-person time with colleagues that simply cannot be facilitated virtually. By reestablishing the office as the hub of activity for their companies, employers can help reestablish city centers themselves as hubs of business activity.