Why You Can’t Ignore Q1 2025 Data
Are you still making office-leasing decisions on gut feel? In Q1 2025, hard numbers from the VTS Office Demand Index (VODI) and CBRE reports tell a clearer story: tenant demand is bouncing back, sublease stock is drying up, and Class A assets are pulling ahead. In this post, we’ll unpack the four key metrics that every property manager needs on their radar.
1. Demand Bumps but Grows Year-Over-Year
What the VTS Office Demand Index Reveals:
January volatility: –18.8 % drop erased prior gains.
Quarter finish: 68 % of pre-pandemic norms, up 4.6 % YoY.
Pro Insight: Track quarter-over-quarter shifts in VODI to spot real turning points.
2. Four Straight Quarters of Positive Net Absorption
Why +2.3 M SF in Q1 Matters:
Net absorption slowed... from +10 M SF in Q4 2024 to +2.3 M SF—but remains largely positive. Thus, indicating moderated growth as employers recalibrate their headcounts.
Insight Item: Modernize mid-tier spaces with tech upgrades and collaborative zones to attract tenants priced out of Class A.
3. Class A vs. Overall Vacancy: The Quality Divide
.png "Untitled-(720-x-100-px).png")
Trend: High-budget tenants flocking to prime buildings.
Insight Challenge: Secondary assets lose bids on price alone.
Insight Win: Host quarterly “premium experience” events (tech demos, wellness pop-ups) to bridge the Class A gap. Remember, thanks to the COVID-19 shake up, there is more opportunity as many companies have left their traditional strongholds.
4. Surge in Leasing Activity & Renewal Dominance
54 M SF leased in Q1, up 18 % YoY.
Renewals = 40 % of all deals (vs. 31 % historical avg.)
Insight Strategy: This means even more focus on the tenants that are in place. A 9% increase in renewals also means an uptick in referrals. Craft irresistible renewal packages—bundle cleaning, IT support, and on-demand amenities to help lock in tenants.
5. Sublease Availability: A Shrinking Outlet
To 3.7 % of total stock (down 70 bps YoY).
Many firms are returning space rather than discounting it.
Insight Opportunity: As sublease deals vanish, compete on experience! Pop-up cafés, fitness trailers, or coffee trucks.
6. 4 Data-Driven Strategies for Q2 and Beyond
Monitor VODI Weekly: Recognize genuine demands before it hits your inbox.
Segment Your Renewal Funnel: Offer tiered service bundles that align with tenant budgets and priorities.
Build a “Flex Amenity” Menu: List quick-deploy pop-ups—coffee, wellness pods, mobile meeting rooms—for short-term trials.
Benchmark Against Class A: Secondary assets can also deliver “wow” moments. What can you do? Think in the box and out... How about AR (augmented reality) driven wayfinding or rooftop yoga classes.
Conclusion: You Guessed It... Data is Winning Again
Q1 2025 proves that data beats guesswork. By leaning into VODI trends, net absorption figures, and vacancy splits, you’ll anticipate tenant needs instead of playing catch-up. Use these insights and bring the wow and the tenants in!
Ready to pilot a mobile amenity that aligns with these insights?
Sources: VTS Office Demand Index Q1 2025; CBRE Q1 2025 Office Market Report
~ Izaic Yorks