Hilary Spann

What’s driving demand for office this year? Would you say the office sector is nearing a full post-pandemic recovery?

Demand is increasingly concentrated in the highest-quality buildings in the strongest urban locations. We’re seeing clients expand as their businesses grow and office utilization increases, particularly across financial services, AI and technology. Some companies that reduced their footprints during the pandemic are now finding themselves undersized.

That demand is reflected across four of our major markets — San Francisco, Boston, New York and Washington, D.C. — where premier workplaces account for roughly 14 percent of office space, but have direct vacancy of approximately 8 percent compared with 13.5 percent for the broader market. Our national portfolio ended the second quarter at 88.4 percent occupied and 91.3 percent leased.

So, while I wouldn’t characterize the entire office sector as fully recovered, the premier segment is performing very well. Companies are increasingly recognizing the value of high-quality, well-located workplaces in attracting employees, supporting growth and bringing teams together.

How are rising interest rates affecting BXP’s stock and investments? How do those higher interest rates affect office rents and office availability?

Interest rates are one of many factors that influence valuations across the publicly traded real estate sector, but our focus is on the long-term performance of the business rather than short-term movements in our stock price. Higher rates increase financing costs and require greater discipline around acquisitions and development, so we focus capital on opportunities where there is demonstrated demand and the potential for attractive returns. 

BXP’s strong balance sheet and access to capital allow us to continue investing selectively, even in a higher-rate environment.

At the same time, elevated financing and construction costs are limiting new office development, particularly in markets where it is already difficult to build. That constrained supply, combined with continued demand for premier workplaces, is supporting rents and tightening availability at the high end of the market.

BXP is building one of the few ground-up office developments in Manhattan right now at 343 Madison Avenue, which recently secured $1.2 billion in construction financing from a group of major banks. Can you share any updates on new potential tenants?

343 Madison is progressing well and remains on track for initial occupancy in 2029. We closed the $1.2 billion construction loan in July, and the building is already 56 percent pre-leased following significant commitments from Starr and McDermott Will & Schulte. 

We continue to see strong interest from prospective clients, reinforcing the demand for new, highly amenitized workplaces in Midtown, particularly at a time when very little new office supply is being delivered.

How are BXP’s projects at 3 Hudson Boulevard and Site K at 418 11th Avenue coming along?

Both projects are advancing through the state-led planning and environmental review process for the area north of Hudson Yards. We remain engaged in that process and see significant long-term potential to bring a vibrant mixed-use campus to the area. 

BXP has also been active in selling assets over the past year, including several residential properties in the Boston area. Why those cuts?

At our Investor Day last year, we outlined a strategic asset sales plan designed to further strengthen and optimize our portfolio. These dispositions are part of that strategy, allowing us to increase our concentration in premier workplaces and redeploy capital into development and investment opportunities where we see stronger long-term growth and return potential. 

It’s ultimately about being disciplined in how we allocate capital and positioning the portfolio for long-term value creation.

BXP is lining up more office construction in Washington, D.C. What kind of tenants is the firm targeting there?

Our D.C. team has done tremendous work building momentum across the portfolio and attracting leading organizations across industries. Law firms have been particularly active, with McDermott Will & Schulte and Cooley committing to 725 12th Street and Sidley Austin to 2100 M Street in advance of redevelopment. 

We’re also seeing demand from technology and government-adjacent companies, including Google at 500 North Capitol Street and MetroStar Systems at Reston Town Center. These commitments demonstrate continued demand for premier workplaces that help companies compete for talent and support long-term growth.

Lightning Round:

Your AI platform of choice? Claude.

Who would play you in a movie? I can’t imagine why anyone would want to play me in a movie. 

One prompt you’d never give AI. So many to choose from….

Jalen Brunson or Aaron Judge? Jalen Brunson.

“Oppenheimer” or “Odyssey”? I’m still trying to get tickets to see “Odyssey.” I’ll let you know when I’ve actually seen it.

Tom Holland, Andrew Garfield or Tobey Maguire? Batman forever!

Have you ever eaten pizza with a knife and fork? Pfft. My mother raised me right.

The most you’ve ever spent on a hamburger? What’s up with all the food questions? 

Bank or non-bank? I’m a J.P. Morgan alum. Bank.

Last book you read? El Lapicero Maléfico.

Borrowing costs — up or down in 2027? Macro trends seem to support rates going up.

What was your nickname when you grew up? H.J.

How long do we have before AI kills us all? The hysteria baffles me.

Where’s your secret escape compound? Somewhere in the Southeastern quadrant of the U.S., and that’s as much as I’m allowed to say.