BXP Touts 25% Year-Over-Year Increase in Leasing Activity in Third Quarter

Boston-based developer, owner and manager BXP touted a boost in its leasing so far this year, as leasing activity grew by 25 percent in the first three quarters of 2024 compared to the same period last year. 

During the third quarter, BXP — formerly known as Boston Properties — signed 74 leases totaling more than 1.1 million square feet with an average term of 7.2 years.  

“Our performance in the third quarter demonstrated BXP continued resilience and provided evidence of property and capital market recovery,” BXP Chairman and CEO Owen Thomas said on the company’s third-quarter earnings call Wednesday. “Interest rates, corporate earnings, return to the office behavior, outperformance of premier workplaces and valuation in the public and private markets are all currently working in our favor.” 

The growing return-to-office movement has been a particular boon to BXP’s leasing activity, Thomas said on the call. And that doesn’t appear to be slowing, especially when you consider giant employers such as Amazon (AMZN), Starbucks and Salesforce have all recently initiated some kind of mandatory return-to-office policy for white-collar workers. 

Indeed, some 83 percent of global CEOs are predicting a full — pre-COVID-19 style — return to office within the next three years, according to 2024 KMPG data. 

“Asking rents for premier workplaces are 50 percent higher than the broader market,” Thomas said, noting that “approximately 90 percent of our [net operating income] comes from assets located in [central business districts] that are predominantly premier workplaces. The CBD assets are 90.1 percent occupied and 92.1 percent leased as of the end of the third quarter.”

When it comes to the New York City market, BXP is still searching for an anchor tenant for its planned office tower at 343 Madison Avenue. But earlier this month BXP broke ground — alongside the Metropolitan Transportation Authority — on a new Grand Central Terminal entrance that will be accessible from the building’s concourse.

“When complete, the building will comprise 942,000 square feet, and include state-of-the-art sustainability features, as well as direct escalator access into Grand Central Terminal,” Thomas said on the call. “We hope to launch this approximately $2 billion project next year.”

For the first three quarters of 2024 — across all markets — BXP completed 3.3 million square feet of signed leases, Doug Linde, president of BXP, said on the call. Beyond the third quarter, BXP’s pipeline of leases sits at 1.5 million square feet, a 15 percent jump compared to the 1.3 million square feet it had in the works after the second quarter. 

“If we execute most of the remaining leases during the fourth quarter, we will end the year at over four and a half million square feet of transactions,” Linde said.   

Additionally, the firm reported its third-quarter 2024 earnings results on Oct. 29 with revenue rising 4.2 percent to $859.2 million for the quarter, compared to $824.3 million for the same period in 2023. Net income was $83.6 million, or 52 cents per diluted share, and it had a net loss of $111.8 million, or 71 cents per diluted share, for the 2023 third quarter. 

BXP stock was trading in the red on Wednesday afternoon at $82.01 per share, a nearly 5 percent drop from its opening price.

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.