BXP remains full steam ahead on office development, and its top executive sees opportunities across all of its markets to break ground.
On its third-quarter earnings call Wednesday, BXP CEO Owen Thomas said the Boston-based REIT expects a higher return on investment on development than it does for acquisitions. The company has sites in each city that it operates in where it could build new office, as long as there is a tenant willing to sign on predevelopment, he said.
“We have sites in all of our cities that, if we can find an anchor tenant, that are going to be actionable,” Thomas said. “And that’s, I suspect, where most of our new investment dollars will go.”
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The REIT has three trophy office buildings underway: a 930K SF office in Midtown Manhattan and two 320K SF buildings in Washington, D.C. — one under construction and one in the planning stages.
Thomas said the cash development yields for these projects are expected to be around 8% in New York and above 9% in D.C. He said it would be difficult for BXP to get that type of value on acquisitions of the quality it's looking for.
“Could that change? I hope so,” he said. We're certainly out there all the time looking. We're not stopping looking. That's part of our job. But I think the current market conditions would have us believe we're probably going to be doing more on the development side.”
BXP executives also reiterated that the REIT is pursuing another preleased office development in D.C., which it expects to break ground on in 2028.
The REIT has been reportedly looking at a site near Dupont Circle for that new development, 1133 Connecticut Ave. NW, owned by the New York State Teachers’ Retirement System, Bisnow first reported in July.
Its office development pipeline is 70% preleased. The two in D.C. at Metro Center and in the West End are around 90% and 75% preleased, respectively. 343 Madison in New York City is 56% leased, but the company said on the call that it’s in discussions with a tenant to take the bottom five floors, which would bring it to 70% leased.
To fund these office development projects, as well as its multifamily pipeline, the REIT has been for over a year disposing of a certain subset of assets in its portfolio: land, residential and nonstrategic office assets.
In September 2025, it announced a target of raising $1.9B by 2028, and on the call, Thomas said it has completed $1.37B so far. It has four more sales under contract that, once completed, would bring that total to $1.45B.
Last quarter, the company sold two office buildings in downtown D.C. for an aggregate of $155.4M, earning it $150.3M in net proceeds.
It’s also looking for a joint venture partner for its D.C. office building underway after selling a 10.6% stake in 343 Madison earlier this month.
BXP’s revenue during the third quarter was $911.4M, a 4.6% increase from the same time last year, and its net income was $114.5M, compared to a net loss of $121.7M at the same time last year.
Its central business district portfolio of premier workplaces was 91.8% occupied and 94.1% leased, and its total portfolio occupancy was at 89.4% and 91.9% leased.
The company executed 74 leases during the quarter totaling 1.2M, including a 206K SF lease with Google in Washington, D.C., and a 112K SF renewal with law firm Davis Wright Tremaine in Seattle.
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