Weaker labor market fuels office demand
A slower labor market may, contrary to intuition, be a boon for the office real estate sector, reports Hannah Kanik of the San Francisco Business Times.
That’s what Nick Romito, CEO of real estate software company VTS, credited with San Francisco’s 32% spike in office demand between March 2024 and 2025. The city has been a bastion for remote work and a blight for the commercial real estate sector since the Covid-19 pandemic.
“At first glance, a cooling labor market might seem like bad news for the health of the office sector — but the opposite could be true,” Romito told Kanik. “In recent years, hiring surged, but employers had limited leverage to bring employees back to the office. Now, as jobs become harder to come by, employers are in a stronger position to require in-office attendance with less resistance.”
VTS research found that other tech-heavy, remote-friendly markets like Boston, Seattle and Washington, D.C., also saw higher office demand to start this year, at around a 20% year-over-year increase in each city. The change comes as technology, advertising, media and information labor markets weaken, lending more leverage to employers who want to pull their workers back into the office.
The national new-hire rate, which measures the percentage of employed workers who started their jobs within the past month, has dropped to a level not seen since the early 2010s, from around 4.5% in early 2022 to 3.4% as of early 2025.
Sliding remote work affects commutes
In Seattle, reduced remote work means more workers are now commuting alone in their cars, reports Neetish Basnet of the Puget Sound Business Journal. It marks the reversal of a decades-long trend. Last year, 27% of workers drove themselves to the city, according to data from Commute Seattle. That’s up from 21% in 2022 and 26% in 2019, before the pandemic.
The numbers could be even higher today. Commute Seattle’s survey was conducted in October 2024, months before Amazon.com Inc.‘s order to employees to be in the office five days a week went into effect. How the city’s largest employer is affecting the commute numbers remains to be seen.
Office mandates start to take effect
High-profile companies and government agencies alike increasingly are making changes to their office policies to focus on in-person work. Clair A. Fonstein of the Silicon Valley Business Journal reports that Colliers Vice Chairman Paul McManus, speaking at an industry event earlier this month, said while office mandates didn’t seem to resonate in the first 12 to 16 months of implementation post-pandemic, that has changed as the job market has shown signs of weakness, especially in the white-collar world.
McManus said even with the changing tides of in-person work, the commercial real estate industry is still left waiting for companies to be at a point where they are ready to make bigger, longer-term decisions based on return-to-office. He said he believes there is still a lot of right-sizing to come for the larger companies from an employee basis.
Source: “The National Observer: Softer Labor Market is a Boom for the Office Sector“
