Boston Properties (BXP) 26 Jan 222021 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Boston Properties Fourth Quarter and 2021 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to Ms. Investor President, Vice Han, Relations. Helen ahead. Ma'am, please go Thank you.

and Good and directly GAAP Call. Full welcome package, Reg to the last The the with reconciled measure X-K. Fourth measures Quarter Boston Properties to night distributed in Year were non-GAAP release company supplemental accordance morning, on supplemental comparable and Form In and press package furnished all XXXX financial has Earnings G. Conference most the

the these you this section Investor not for in a are If investors.bxp.com. call of available Relations copy, our webcast documents at did be website XX of months. available receive A will

meaning this made the Reform Litigation like during At not Private to statements call, Act. conference that the which are certain forward-looking would of we this constitute historical, Securities inform time, may you within statements

from assumptions, Properties forward-looking reflected risks believes on materially be company's forward-looking attained. expectations yesterday's are Factors based the press to undertake any those from actual its duty were to will that detailed SEC. in and time it by cause the give Boston in implied a expectations time to in with company expressed can and does release the statements results Although any could no update The not that statements assurance statements. differ filings forward-looking reasonable or

like welcome Officer. Mike Chief Owen Chief Executive Thomas, LaBelle, Officer; I'd Financial to and Doug Linde, President;

Ray Senior be Vice Executive Ritchey, call, President, regional our of address to available will portion any management our Q&A teams our questions. During and

remarks. I over Owen would to Thomas for now like his formal turn to call the

of XX deep and and our you everyone. people. for company Helen Great Investor new have been western introducing and start Han, knowledge our Thank was Marketing who's wealth years, here. by over region, our Relations. morning, about BXP good has to of Helen. a like for Welcome, with Helen, to has of you, formerly Head I'd Head Helen

allocation enter XXXX. going conditions real that the potential. activities and backdrop capital capital equity securing recovering BXP's The reflect conditions well our for we market to U.S. and as the financial as results serve for operating current space. momentum, for BXP's office needs cover quarter for So operations for today, a growth clients as as increasing BXP's private high-quality impact I'm BXP's office the of economic economy estate the fourth

Our leasing activity. per million fourth and X.X square above quarter share midpoint quarter our levels. of this our quarter with It FFO and guidance. leasing, line above XX% third was of the was prepandemic the in completed higher of market our leasing consecutive feet significantly of We consensus, XXXX

with leases in With X.X term quarter, This on an which commitments execution be premium marketplace attributed assets hallmark be portfolio. access, of but years also velocity to our the and the not only the current quality our nature. can amenities average economics long transit BXP's for of are and to in continue the term lease achieved signed by enhanced great success this and clients past strategy

and and BXP technology forecast. U.S. resulting and hard in XXXX, the very the office promising XXXX. demand. economic X% key innovations be to improved science a has and growth believe life the on The recovery the consensus Omicron and office setback has been space well demand. favorable. remain conditions in in the to returning which further GDP improve and Most more turning variant driver workers Though to market course are impact proven factors We Now the XXXX, for funded, experts space balance in will to with a economic believe of predicted and lab continues pandemic in

funds equities portfolios a from as pandemic; the investors, to of rising also to interest will allocate due rebalance one, two, fixed the into from have away income the lows and flows these likely rates. performance Capital sector due further their real to strong estate reluctance grow to

office New the another for business. created uncertainties long-term slowed the pandemic, demand also down positive the office by given supply has

rates well-timed to therefore, limited in require Fed costs inflation, to the Inflation refinancing rate dimensions. Moving debt in significant and will rising, will signaling a Interest coming financing XXXX. to raise make the activity challenges. rental current needs and times Fed's funds the in year. Rising and XXXX rates feasible. construction which it is BXP multiple due are the several challenge, likely development greater will faces had has and higher focus on continue

our bringing in-person very work time, to over existing of higher back value environment. costs portfolio which hesitancy is replacement our buildings. increase tight, employees should in their However, market the also of clients' contributes labor an The to

corporate As retention persist, we favorable over efficiency, change dissatisfaction remote stated with culture we of XXXX work. time challenges this repeatedly, backdrop we for widespread given decaying the and will market Though associated believe have conditions to to with a perform. phenomenon continue as see BXP

all-time lease in XX% fourth science-related, is fourth activity increasing private near-term significant sales of facing previous achieved from real assets and record quarter the was up and So office quarter XX% estate a for stable anything rates robust. fourth declining year of life similarly market estate assets for billion expirations. moving an with markets, assets $XX in were quarter, Cap the for assets sold the from quarter, or real rollover commercial volume activity are the and was to office lease and limited capital capital ago. up the

for particularly District $X,XXX a deals active around market in deals X.X% foot, of with life at rates to rates basis. part $X,XXX rates sales the X CBD sold selling stabilized average in with X in Hudson simple cap full Notably, the and to Yards low major the below a York approximately a rates. an X% foot a in Cambridge, X or and square fee basis, was $XXX cap sub-X% range. science assets for with $XXX or $X,XXX significant major at square And recapitalization X% of foot in X%. foot, for cap City, X on a Seaport a Boston selling The on New area square cap in approximately

pricing Lake aggregating a of announced District with approximately the in And cap X closed deals in range. to pricing escalate square and or Seattle In simple averaging $XXX around with $X,XXX rate. X% fee foot priced Columbia, transactions to $XXX and continues foot, a X% above million low in basis rates CBD the foot, rate; on South a $XXX local rate; completed, and record, low and Union $X,XXX foot a Fremont a a cap square over mid-X% sub-X% and the square cap a in at $XXX a at cap new in a

described closed on program in New acquisition capital City Avenue pipeline. to as previously on activity the our stabilized Regarding South of starting in the XXX a co-invest XX% and market basis. Park our acquisitions, BXP's with will interest and in capital our into placed capital drawn partners bringing York deal development December is for Two strategic active we the redevelopment, project

We continue in to elevating with markets, equity of value-add and potential both anticipate additional partners, our capital active of have and activity an private off-market acquisition dialogues XXXX. are deals in pursuing of many with on pipeline partners assets

Street the yield West We million asset the XXXX. Bethesda at of development represents at Street cash of Boston, these The disposition a of active In and with XX% sales development lab million stabilized very conversion Causeway BXP's and delivered at projected XXX delivered $XXX pipeline. being aggregate, basis. of in into completed and million a on fully projected In XXXX, the Waltham. X in to add ahead below Marriott projects are XXX $XX $XXX square We budget X%, completed million, share and schedule in Wisconsin stabilized of are headquarters XXXX in quarter service NOI investment. project X.X to feet we assets of a volumes Avenue leased, our anticipate and our higher also noncore in excess

Given adding XXX the placed we $XXX the our Next speculative Avenue high-quality development market partially CityPoint, pipeline are this cost we Reston. in described square we XXX,XXX Waltham. I of shareholders. development X%, for lab past a value CityPoint service our quarter, million aggregate approximately ground-up above create continuously to And projects X% in in development rates refreshing expect Park our into and million South feet BXP Reston of XXX by cap aggregating just will in $XXX in Also, these for office previously

We the strong describe have office developments lab they redevelopments we when announce will and XXXX, success pipeline to a ready Doug achieving commence, of active development. expected leasing with and and very lab are later in our

and current to years. projected movements, feet After of leased approximately all our is the NOI square to $XXX billion X million over $X.X investment, development our pipeline million XX% already these next add aggregates X.X and

in returns summary, and another in and So had leasing strong growth XXXX. successful prospects and are quarter for with active financial excited for our we continued

economic in improving a our We per completion well-leased expect delivery growth revenue development activity, combined variable allocated a capital conditions leasing large-scale recovery a in science life XXXX, year and with opportunities balance additional and by of continued science pandemic refinancing to expanding from equity FFO activity streams, X private in of pursue recedes, this nation's new and rapidly hottest share new partners the acquisitions sheet of driven pipeline, strong significant in as costs. XXXX markets portfolio investment the capital life well-timed lower

turn I'll it over that, with Doug. to So

had on to Owen. going Thanks, activity. new our my Hope morning Good a everybody. leasing remarks all good this you morning, I'm focus year.

quarter sent with release, leasing out we a evident York, in our release strong the was fourth D.C. ended around Francisco We As had press Washington, points. basis pickup with activities the region. Metropolitan about an spread occupancy press of we and pretty XX the New Boston, San second last activity night, year

includes square XXXX portfolio. January, negotiation we over XXXX. have in of portfolio feet is currently As more basis the it square of of commence, XXX,XXX leases about potential points we We of in feet represents space square for yet occupancy leases commencement, space expirations. and That XXX,XXX to feet at XXX,XXX XXX,XXX in XXXX the increase More an million in-service occupancy began than the majority signed not covers in-service they're so vacant and figures X.X than XXXX on of feet. so here XXX of covers square about end XXX,XXX with have our sit today, additional our that

During square expirations have in 'XX, of the about in-service portfolio. X.X we million feet

economic million years last decade, that's in in the leases. the so X.X of Over early some the square pretty -- those feet feet XXXX signed pandemic and and million company between this over total where build-to-suit has -- for large in square X.X we've ranged the shutdown midst leasing

of the the space do portfolio. we'll encompasses renewals year is portion available it's and some of each leasing do but leases talk about and significant the early on we true, near-term Now renewals, of on in some a we that developments, today, and leasing each year new

with and of 'XX. exposure, works, leasing on feet feet, X.X we so an January leases, with between X.X an X.X is in million X.XX probably expected upward deals XXX,XXX and So million we annual the trajectory signed million X.X somewhere occupancy feet believe in square as million enter over square of million, of square our

statistics of second-generation portfolio, to is down flexibility new San merit but that we payment. us you subtenant, little center. made XX,XXX short-term operating granular is explanation. XX% with a are roll-up EC Francisco square Station at Citibank leases, to project, quarter is The kick-outs floor deals and flat with which a commence XX,XXX lease this lease terminated construction due a termination First us we Citi our The project. lease. In doing whole North had York cash foot a for foot conference went on through to out so discounted, New take square where CBD The the a direct allow The our that with a City, rent if their

New roll York that, up. X% a Excluding City had

that no to wave the office that and us there's question return hit November Now some in slowed states. Omicron,

leases of our that a impacted the have delayed in customers' we need space. in been none However, change or for have negotiation by

January discussions. of leasing while X with busy and our teams very a LOIs more and have active of more With the first had -- December the signed the few slow, weeks weeks month were

be on due actually available I be achieved we same that financial thought sectors, have professional we very haven't and conversations we'll have services would of is are that the in to collection that February. of services in blip the only where we've we from modestly that note continued area forecast our to locations our quite see But and projections and that January, pickup a Transient for monthly permits. the space our turn start well the be we in The vast of the Omicron down revenue. function in will business from our our month believe this the would we slight anticipated to and CBD parking short-lived, seen those majority portfolio. may of

I leases We start and XXX Boston months negotiation lab foot of all ground let's on want are our the square regional Winter Street signed in We've square conversion a July XXX,XXX to remaining provide few broke for observations Sciences. suburban XXX,XXX our for activities, about X in and lab Life ago. we XXXX, of feet, space. with

occupy are rents is the during back of half in underwriting our XX% initial up XXXX. The from first expected to tenant Net of XXXX. March

for a in and erection building. it's -- but XXX,XXX the next Steel At leasing about we're we're the XX% the fourth started XXX in month, space success square 'XX. CityPoint, demonstrates the market. deliver negotiating foot the of yet new and going lease hoped to expecting it's And going quarter start we're on hasn't hopeful what's to -- of

space avenue second offer roll-up lab are buildings purchased awaiting our expect November a XXX,XXX rents. June of we can square we last the in the of We eagerly and significant feet in where expiration leases

we to late our continuing a XXX as which clever. we we're CityPoint said, another with delivery supply, to this Construction will demand are XXXX ground it square Owen XXX,XXX calling there. commence break feet supplemental, expect complete, construction, quarter is outpace and With CityPoint, drawings at on in very

traditional busy. extremely leasing There is out demand there. office Route also is XXX Now our office

net-zero a recapture in and with in Street, This agreed installation, and a commitment extremely the building at We Wellington's building CityPoint Kendrick important and the Street a BXP a At Waltham. quarter, to square Wellington. to XX-year XXX,XXX net office a square Needham, was found XXX,XXX XXXX as XXX reposition both completed announced we which increase to feet, re-lease is XX% in as lease rent. lease we Main to way foot we've

complex. working XX,XXX the of which we this will have on of In recapture feet addition, we're XX% basis. This foot of X% currently under November square lease, for remaining tenants finally, rent expires project, cash X a have CityPoint XXX,XXX office roll-ups backfill between another commitments And and 'XX. totals in for XX,XXX square other early and suburban at our square traditional feet These transactions leases. on is and

was for new XXXX. a square Our At XX on deals requirements basis. a CBD large construction the deliveries moment, feet. was Boston CBD, small is office The average to Boston We XX% and are this transactions. in XX,XXX quarter markup activity cash few completed primarily in be there the going there

getting lease Federal of Our activity In is during largest 'XX. West space square where at York XX,XXX Motors General feet square back in of XXX,XXX square greatly. than The in exposure had Street portfolio. XXX,XXX Dock square CBD at XXX,XXX executed at We block City New leases full early and XXX the square XXX individual in at lease we XX. feet more We Lex, foot feet Times floor We we'll XX,XXX completed vary at and XXX,XXX Tower. completed York XXth, be the Building feet quarter, XXX Princeton. over at New Square across the a mark-to-market

at basis. while up XX% XXX X% we leases XX% XXth Street on building cash single West that down which Well, rent retarded quarter, went by I and basis. extension XX%. were the floor, XX-year the called General that the cash recall for leases flat, really a we where statistics the down the our The floor at range Motors signed a on rent from to You'll now is last lease up out completed

current Our be continues activity York in strong. to New

GM, XXX XXX,XXX number buildings. feet. and transactions in We Lex excess have is activity lease along square those negotiations with multi-floor underway at smaller in of a Total Madison XXX of

Avenue the completed Park of As Owen discussed, South. we purchase XXX

weeks. direct market asset, during construction has responding space amenities to space Mission, San the the system subleases and opportunistic in been XXX financial as services and at have month at are and the The plans haven't well large has absent throughout Riverbend tech been upgrading buildings it financial and inquiries February, to from a working We begun the demand their the companies the we commence on building confined tours. professional even been the better has program. will other been of the to the sublet formally And of CBD, base so district, Francisco we though to like work modification Physical a complete our sublet. our our largely as of the In Salesforce basis firms. buildings than and activity Macy's in bulk market, XXX with Folsom, couple

CBD in in market We this add us, or square city. includes And square for million to went XX% entire sublet million the quarter, perfect portfolio. if his segment XX John list limb CBRE, of feet totaled grows buildings feet does and who the team it but or a XX vacancy about out can and premier asked from not, The whether about X.X%. the of debate space, work on we People Cecconi and the to portfolio our X%. current is this it you it's

the but and the before, market. made in can't this I've assumptions rents point concessions where be look Now simply overall might availability statistics make you about and market at

venture conversion months. months where the building a versus construction. to life completed square a And of starting is building our with delivery The to Boston, $XXX lab lab in X our this this We to average success Francisco. square in project increased cash of lease commence few XXX a an venture intends XXX can ARE of rent feet new Gateway Gateway executed to over off science San advantage South a the X% full Similar foot. XXX,XXX we relative building The to time for CBD ground-up successfully quarter. deals shave with next by rents our

Jose. San described Last consider of to quarter, we in gauge XX Platform pricing our restart as efforts I the

relative pricing XX base months construction over costs the to we XX% had building ago. total Our just increased

all cost of issues see in to material across all markets. meaningful and our increases continue trades availability We

finish systems, much very base schedule mechanical particularly you a as And morning has Platform absorption. I'm refer expansion, we XX a strong another that. XXXX one delays. net my means time to what won't titans, As construction tenant have start, had got in early remarks just a risk Class Peninsula. last healthy foot of this which leasing week, drawings, Northern in tech building of office And the Silicon we you doubled [ The or XX to Valley if from example, weeks not we to to with ] wind decisions A lead XX, XXXX. an square have approved once markets the XXX,XXX until earlier Greater Washington. weeks, make on doing We're going deliver on the

During completed the was to we totaling with leases have on low over held RTC similar previously the XX our office fourth Reston, square Rents X.X% project in XXs bumps for vacant feet. Every quarter, low the space. new Next. firm at bumps in XXX,XXX deal annual with XXs

our The been as first during of delivered Owen quarter. nonanchor first phase transformative RTC Next Fannie to and is lease described, completed XX% leased. It Mae, the we This is project has to and the new of completed again square we Town it's X-minute Retail, space. where leasing, the retail currently with feet walk of tenants vacant Reston over a on Center to heart Skyline, the XX,XXX

in for filling of the that In leasing. have with delivered reduction a square tenant at Penn XXXX district, XXX,XXX the swift JV improvements, our metropolitan the York tenant area, their feet away D.C. working seen and COVID-related we cases. in to Boston, building. In we're We've of the in New remainder and availability on assets current with continue our to chip we anchor our about

tenant activity search rise is starting daily to new to employees. again. Employers Our continue for

to back their to physical encourage comments to are together. be To about going want use to their to teams space circle employers quality, Owen's

way our been allow great as has retain mantra to to their customers great create use space and talent. attract and Our places spaces a to to

that in here. and important believe office, If be have space it's the they right spending may employees less when place their more to even time you are

turn I'll the that, Mike. over to With call

Thank Doug. Good Great. you, morning, everybody.

the So earnings changes fourth this guidance. XXXX quarter to performance details our and morning, cover our plan to I the of

consensus funds $X.XX and $X.XX guidance $X.XX. The estimates. $X.XX of share our midpoint For higher-than-projected performance per our and above development the of operations added exceeded quarter, management by fees which of we per share, announced from $X.XX improvement the drove per of fourth portfolio range the share, and was

I would in X place outperformance portfolio the buckets.

income San a XX,XXX San Francisco new particularly First, And in and rent, we executed Reston. In signed lease a space lease renewals, feet we delivery on Reston, XX-year immediate pickup new from in Francisco, foot earlier-than-anticipated X several at smaller aggregating delivery. a leases technology square with and company significant square XX,XXX with in with leasing, signing.

several off from had we We receivables XXXX. also in payments tenants that collected on written

we an the physical quarter. due higher City utilization to better during service York from Second, in New increase occupancy achieved income in

third prior to to census variant, Omicron impact Just a from the XX%, was the represented our close New City pickup big the of running York which portfolio quarter.

Third, now for rate. Parking parking quarter, the performance. we its XX% and at third from X% experienced million up totaled It's revenue of quarter. the stronger running hotel revenue prepandemic $XX

that $X.XX there's So able be reach an means share or an to on per recapture prior should levels. incremental to we million $XX annual basis

XX% operated hotel at Our quarter. during occupancy the

our FFO. of For difference the $XXX,XXX next only it million, years. share XXXX we should to $X.XX full the a contributing above operated its contribution to in in recover of per just compares couple year $XX This that breakeven, of XXXX,

anticipated. a And fourth, of square from earlier XXX,XXX we headquarters foot development, recognized World we than the the month Marriott delivery income

below delivering as in exceeding is well to it well. so came addition early, profile costs our investment budget, our In return expectations its

X.X% due our locked have feel increased that We trade a XX at rates in quarter. decision redemption we I funded about on climbing. $X.XX of since mention to notes we guided item due was per that interest last of a We that were an notes last to by debt points view a the we our about share early with rates of likely about X.XX% $X good X.XX% were third like extinguishment quarter, million, in an our $XXX basis The the XXXX. senior issuance the treasury reminder This billion of quarter would to loss redemption for in as the opportunistic is expire incurred XX-year as senior rate.

our priced April Avenue again, treasury closed than coupon on we that reduction a XX-year no billion but not significantly X.XX% will current We point $XXX at in rate, X.XX% and Lexington a it mortgage The opportunity XXX to by until it underlying of interest made couple in XXXX, loan and $X with limited quarter X.XX% on expense expiring lower of of closed a the rates. starting the over for to years. years. And an rate this increasing as off debt had first December penalty, due XXX with next we the we We now carried off day overall decision the the Despite have lower 'XX. pay refinancing XX mortgage million, see was coupon. interest the basis available, approximately Owen of mentioned, we expirations similar

Now in I'd year, XXXX. to our confidence which leasing the growth into turn the to are Doug profile. activity described adds we the heading seeing have we like to

we're FFO As XXXX. for guidance our a $X.XX result, increasing range to per to share $X.XX

from quarter. last share, new increase as than is the income. higher is $X.XX coming well anticipated portfolio it's contribution projected and higher per fee $X.XX Our The higher in-service as development midpoint from

our reflected You projections will is the future that in earlier-than-projected stronger that basis due the our more XXXX, from QX down growth conservative. which our point. are increased higher NOI primarily This is of we quarter receipts guidance. fourth experienced the our leasing income, which same-property cash occupancy, where onetime points starting collections includes and higher-than-expected in inconsistent service with our might XX quarter, increase by The we performance reduction this our brought notice to an in in appear

that's we income, Doug which the income. portfolio, termination rent during the in described X tenants covered same addition, recaptures where excluded downtime property have being our new but our between but downtime coming exiting we Boston have In will rents, is lease at higher is as The leases. from by in suburban tenants, recognized some

All of these are positive results.

brought only the down range. the top We of end

the effect, is end in actually higher. bottom So

NOI assumption from X% is same-property growth X% for new Our XXXX XXXX. to

We to guidance same-property X% our growth, new year-over-year. an development fee and to is for meaningful also million. $XX which million, assumption pipeline our of increase at is to range for NOI to an revenue change only other $XX The The XXXX X%, in more $X Overall, our than to represents from our strong increase reduced XXX in million to Park relates strong growth assumption XXXX we XXX to and development of project continue XXXX Gateway South. at growth of our midpoint our XX% the FFO additions Avenue range. cash improvement

come to developments near-term These delivering are life We add primarily to FFO expect share from the an our office our expected new X.X% incremental and our acquisition science midpoint. XXXX and XXXX per growth program. to or $X.XX at

assume not does acquisitions in new XXXX. guidance Our any

project a interest of $X.XX in range. XXXX refinancing our at resulting last activity well-timed year, benefit and midpoint also share of We from lower per our extinguishment expense the debt costs in

$X.XX For guidance the share. first operations to quarter per $X.XX of funds XXXX, from providing we're for of

hotel. confident and in results As our seasonality a expect reminder, plus growth business. remain we vesting we in in with stock first due our quarter that We're seeing our of summary, strong are numerous towards working of gains the In will always trajectory under and portfolio payroll deliver activity lower new $X.X that taxes in we're our to the occupancy to timing the years, the result X And leasing income associated in the underway, coming in we development next months. we where sites have billion existing of addition XXXX. XXXX have to the we over starts ownership and

to our questions? That open Operator, remarks. lines up formal can the you completes

Instructions] [Operator

from have Citi. we sir, question our Manny first And from Korchman

space, highest the was very on Michael I office top buildings highest here with Properties the can markets, has good company been Boston history. which opinion. quality has Manny. the the been get always It's over quality in wondering if focused Bilerman your the I for

space for own and in Class depress overall? going pandemic, capital a Class just about other the How in you B that going space, of out of to and then of modern about substantial the encourage come back. because office the Is and great play today is may will you it think more office office redevelop And that market? inducement, either to to you the is arena of talked everything that A+ be desire into all think ultimately stock, in space of is how of else? that And amount going marketplace of to how C post minority that do rent or a the spaces A, just going to into Or entire those have we all A+ bifurcation this is which you to terms type affect broader trend? A, a need employees As think assets their do a property rents think to companies you to do provide types? reason it office going

unpack, a Yes. best. but lot there Michael, It's my do to I'll

remarks So said outset: strategy agree today, their our great more company's founders to have place -- We And what of do going have you worked, here And in strategy. at do kind leadership we for to is do are return hybrid very want stay. great always and our hallmark and important it's I the the is said, because CEOs going even think to with It's employees which say in. Doug important locations. pandemic. We think what been company in we actually the to that it great work it's a office. of BXP's It's to to offices always space. buildings articulated and great back think to companies be to of is and the you more

to be So come entice to having going near located office. are to all those things are the to that great important buildings transit, back that increasingly workers amenities, have

top So you the -- going of the on of the San stat to if on the San Francisco. That's X% market I and think the the market The vacant. on aggregate now, growing about it. actually interesting it's XX% gave the of are it's rest he which the stats market, right and Doug between data Francisco you XX%. is you gave grow further. And think very is top availability the bifurcation incredible

So the is bifurcation increasing.

So to with more buildings. coming the now question, what's happen quality modest going your to

think city-by-city neighborhood-by-neighborhood. markets economy I think it's very case-by-case, will grow. will I building-by-building, The recover. the do office and

push I think to of competitive, those be will buildings Some it's office. as get probably very and to harder leased rents. do going

valuable. places is in Land like Manhattan incredibly

offices and many mean of for were suited that, But residential floor are for developers that and creative residential. of buildings So are they -- there I well the very exceptions I'm large not these plates, there sure users change to large of of have could to see a we'll bay lot be some don't depth. -- conversion -- properties. they're because reuse to a these created office corporate

Some into may and torn made get down something else.

Some -- made setbacks into an buildings and renovated top. older to be the floors York put into may been have where that building, there in have New been added were

of the offline, And lot commodity you'll And between So bifurcation and the continue growing quality widen. that of being up. I I stock some firm there'll think time, going into markets slowly, think is a be some stock. conversion this creativity goes taken will between and economy But and over see it. the ultimately to

here. It's Manny

your you. for XXXX. better a I positive I you was a Just Mike, today have given on ranges, lift a a think I guidance call to If notwithstanding and think everything the question about totality, in the guidance, mentioned

some all of of than getting offsetting positives, negatives together Now lift your the what that? to more sort the the of add Because I'm lift if midpoint. are I

to that? think the more? do about Is conservatism? how think within something else we you negatives about? Is raising we need are from it range Like that's just it So there keeping

Look, sure, activity. But is, see result that go is increase in conservatism Doug And will environment. talking for leases. about do this those in I activity the mean, that occupancy. delighted we're question leases when to into in the us And signed leasing the there's leasing

it much and how much space we build recognizing And spaces. little start out 'XX, these bit in wait so the tenants a the until how to many cases, revenue on to into Because of goes is have later? that of

long is to going that we to how have take. judge So

not are our and very the So cycle out build positive, but trends the think in cycle is sales cases. immediate I all

So have we into our to that judge guidance.

I So that's think of it. part

believe low it's to significantly. that stuff. we've We computation some brought possible our doing pretty getting the the the end that that we don't of and reason we're gotten be to some that that because before end at that of The had activity us seeing is we low we're up that guidance of the leads

enough be gotten to at feel the increasing we high haven't point We like end. this should

it kept high where is. the we've end So

a happened. things due bit any There that little that hasn't same positive is store, kind meaningful talked that's build so to occurrences really our We our negative about kind ranges. guidance And guidance. mostly in been of we are the of how which

occurrences all -- were we our that the So at there's no any really guidance negative items we put in in that that of put meaningful.

And sir, we Yulico have Scotiabank. our from Nick of next question

the I commenced you quarter? for that give were the feel statistics just new for on just had us first spreads not a question the on maybe a you rent fourth can signings, what give

I I along. that the did all way Okay. thought

go New X% this look we remarks, leases between Center. If my of plus in X% I said up we XX%. was -- and I York of or other it just think issue is that in City, and the Embarcadero assets assets all you market, New signed Washington, -- I back said Boston space sort flat York City In in were that the was suburban vacant. basically that that the X% the greater leased in certain in quarter the minus and at D.C

on you -- a markup can't have space, is because there a So vacant infinite. it's obviously,

XXX they XXX call that Avenue in and we in the negative X% to couple of year signed a trending to on them it, lease at general, on we a short-term good were positive the XXth that leases Street that a with other Lexington cut some at on So tenant date leases West for XX% space ago. had XX% positive, deal

But variable. positive. all really was it was it net-net, So

Okay.

at there rents yet over up And San end points it is to this occupancy back is dynamic those a interesting XXXX like -- down Center, buildings. of building and versus rents basis for Francisco. up where going just of is, Embarcadero on kind down, it's going look question even average like Second average point, at your you on XXX have the it's they're the the looks down this -- up like in are

portfolio. square for you So buildings the sort there premier XX% of is some about vacancy looks trying those in the X% vacancy the buildings, I'm of around which Also like when where talked worse to for than -- overall San Francisco.

to what's and market like And understand so there? just versus those with going the on buildings trying out

Yes.

just to -- the of So sort what said. refresh I so

in top, Embarcadero vacancy feet the Center. it, of million the XX call includes space square So

vast overall X buildings. our of blocks of that So the availability The that at very and the way have in don't space. rise majority of EC that's rise is of EC for in Embarcadero premier much we statistic of "portfolio" of Unfortunately, X. low Center X% of low in the

So there. it's here floor a a floor and

We activity of on have that some space.

because anymore. space the the out, from got doesn't in with that make of installation ago the is -- some of fully a sense user XX is had space that where demolished, moved of asbestos some original years to Some and be cases, and space needs an -- it's tenant it just

in will to We rosy that rent. availability X some going have healthy on of Center make space space. the is of low at We is differential projections to confident buildings we're year, getting but X and the lease during don't than between that rise different the kinds Embarcadero there's space during X% rent XXXX. So top ECX, right? for Obviously, hay a in of those pretty those

Mailman from of KeyBanc our next sir, Craig And question Markets. Capital

as And How payments? much the into is was that how of from big we maybe that of the just in Mike, follow-up. head upside $X.XX XXXX? the kind -- bucket quarter collecting a

And be I now how would don't we're more. exactly collecting $X.XX say I assuming close it to going that big We're anything I tell is. right for really not think quarter. the that you was can to

significant don't looking coming -- that not that anything So would in at XXXX I on think I'm that be I collections. is

other of X I effectively we're for the the tenants the one not for rent accrual thing now. that have that -- say we're that tenants that we any retail And of some I not could accruing watching So that of happen And right number. -- nonaccrual. either, to tenants that would return some of projecting in projecting we're XXXX in but are these do tenants the that we're is and

continue earnings. kind kind ability rent earnings, be tenants a an bringing they and accrual us the for a pay generate just although it in and our of cases, our certain As It's line. impact back impact of be would will, those to on which on to have noncash straight there's to successful sales, back former bring

happened some will of impact come another [ -- last that things that in the years. the ] that's So X

Okay.

to necessarily blend need So extend. you a do don't and

have it just better accrual. feel flip to to to their pay for back to You ability about

the accrued it's them right I balances all analysis back. mean every us try may in bring when make that of wrote and figure rent the time we their tenants an we judgments quarter justified XXXX, Yes. on do to when off and to for out

X think what tenants talked that about I mean would buckets the of past those of are that in retail. I the that are Co-working Then you I guess That's Mike there areas. in sort has that primary refer to largest. entertainment one. -- as is

we traffic So to mostly our in that from we have lack number in and a struggling revenue in the of have country. we're nonaccrual XXXX relative are of in local they of on a of perspective where operators that were cinema food certain still foot of beverage, because of operators, a the all with. number then markets And the parts

you general, how that or you maybe guys Can in rents you about separately, required on near approvals are MTA kind then or are move construction as of at space along. it continues just site, some starting -- rising in And on just the your would medium helpful. guys it what need site, That's like term? new are to just thinking to thoughts seems Okay. think how here got us to about costs returns be that developments steady. to about thoughts holding But and think on of more kind give

Yes.

XXX a York comment Hilary, officially our Avenue. Madison as give New general and you ask who is then to me let here comment, leader on new regional I'll So in

have clear quite your at, single up be it, you lots that appreciating opportunities digits on land costs unless don't rents a to very our call that are because have portfolio it that the high in life So we basis. been you construction rate, to if an commensurate going is our have science embedded bases. And challenged, annual going have have are of great right, returns development happen across in portfolio. platform at We

go. long runway So a we have to

are tomorrow. XXXX. not deliver to couple have we I'll to conversations Hilary market see real the describe until to a access that's let Madison there's XX. to to to continues not there XXX our calculus that rental and because to with associated that's I site having. probably regards growth move And commence we going is want getting strength some over rate it, not will Those Platform it's described truly what's "enabled" on kinds work lack the outsized Class timing decision And of months we're a going with have of likely, the the our of the or us in of and couple A of forward as construction. next front we therefore, do of next to of will decision inventory with some years with sort the -- because whether with really in Hilary? partners

A. Thanks, construction Doug. high-quality I commodity assets all, said to commanding would -- first office what relative about and more of new echo premiums rents Owen

of we do So proceed. that of that's MTA have to XXX to obviously of favor launch of to ability Madison. terms do at terms have us terms ready potential to demolition and some that work something in with be But in the the the project, we ahead in of our of weighs in construction work some leg

in a not of So an sort decision to medium future, of, us. making we'll the I'd immediate but it's ahead near be decision say, that it's

And sir, have we from next ISI. of our Evercore question Steve Sakwa

in people and been It's really on city Maybe the struggled Francisco. homelessness And living really to kind first deteriorated have back. the kind of conditions the urban San question, that's just bring of the biggest broadly crime city.

of that? So in in what think are city Owen your the Mayor sort what sort do business the leaders of for I'm ship the or you just Francisco? right with looks to like line kind of curious, And San Doug, the or conversations time other

wearing, restrictive that related would all frankly, say, COVID and acknowledge conservative because of of pandemic. hit it's previous also, companies that think the one, city I requirements, I've the mask in very saying, the Silicon Valley I markets and all in Francisco, not Francisco think of been of -- to other San COVID earnings the behind calls, you're clients it regulation technology returning to, on very thing. I kind office terms And -- regulation San what has San of our Francisco, said being, look, occupancy we the people I Steve, have hardest -- would of

I look, Bob comment and may on So want -- this. to

in that -- -- homelessness heard San there's is Again, around voice And is San the raised over Francisco you will increasing open. be the and and think an getting voices our about issues concerned will hope I and in recover. that crime it be those add? cluster increasing Bay increasingly we able but time to city anything you Francisco the San addressed. mentioned of knowledge the for the need you leading Bob, world, well whole the as Area computer that look at and do Francisco, acknowledge there that do bodes science city that we these think very want to that be is factors to

working the now cops things policing has right on out more and get publicly on plan change, have to The stated a and more street. Yes. that she's to Mayor

think on to outcry a in with other I business San yesterday, there's leaders I community business from Francisco a change. John you clearly the [ So an and will things see call have ] were change. that and

in get some somebody laws. there will gets the So I think enforcing And given time, will start hopefully, we see a that change. DA recalled, and you the

-- Yes. just Steve also I think, I also would add, too.

streets you more important, cities. office. the think policing people obviously a would think safety also logic -- from the the because obviously, is is other people office, but I security have streets a protection that return to key situation I going circular also return. to the in on crime-homelessness creates to each allow that I need there's the I mean around to to But and for safe be that

both these of in need to tandem. things happen So

Okay.

And perspective of sort design upsizing, or deals of Doug, and think of changes are But of got. that planning sort it's talk seeing discussion maybe, talked of progress deals and from you've needs question, you expect of space maybe general that just you're do what utilization? the I about collectively downsizing you averages. Second deals or to the people just space pipeline And in a about kind how what today? other whether sort about you that hard put know with the the large when they're and kind are

with say conversations with equity of professional having customers world XX% VC, the are and are, And consider that and we decisions are that finance, would and were I it consistent that the most the XXXX. the And probably part, the some say their those companies. shrinking. believe And same. are people is asset I for both architectural very, The would growing, space. in today in services not with way that then would in Francisco York, I are categorically Boston. professional reduction beyond, tenants they growing are what say XXXX modest not, are would associated private companies tangential in very XX% management, or most for probably planning services New not San that of The planning some space

back -- that and I to refer areas create perspective. XXXX. not right being who to that On it the client utilized corporate a think in as in back our to was you to bit But I what in where we're a to what would anybody a I the built no quarters, growing distinguish want to go in if able about are by business position X comments is you physical over or more to calls it, there some or these call think -- still my to being question hard, companies And a listen built that much I is trying is X to last, their technology as the however cadence works. or you to what community architects degree, now, understand understands in space the be margin, not really that impacts little portfolio it's I a think, come cadence the of be very of would team what And XXXX it's surprise. are a the versus of office. don't whether changes their it better or you talking or they clients define interesting conference and monumental what about going and that's areas make until "common rooms, from is to is areas" to gathering

believe, through accepting and back. to how delayed a delayed delayed industries -- is folks we're getting person just and a productive unfortunately, -- we're going and been there. know, And their day encourage I don't people in work mean truly get partial "hybrid" in not work lots until I or start they of we've how to and

I next So but there to yet. not be in surprised cycle, for there, the changes wouldn't be it's

from And speakers, BMO Kim is John Markets. our question next from Capital

been mentioned dissatisfaction was employee retention. really remarks if on tech work? in you you widespread your the corporate this And companies button snooze reduced have purely I wondering who prepared Owen, efficiency returning pressing that could does and to that on with Is include elaborate the anecdotal? statement.

this. the on companies our the think we of some definition, and country, it's speak with leading clients a well, handle done is there by although and is filled good as potential estate. have think architecture clients, feet million anecdotal, a Well, I and -- XX providers surveys have it speak various we that Yes. square around But service to and real from by we in been I we to have --

want And I thinks have by remote to good is summarize it leader they spoken not a would who for saying to yet fully that I change. companies, and make just business their working

new to what's change the more are up. X think variants one, happen difficult been I really making keep that things: these coming

the we return that's most over at and work. to Day, had holiday, the Labor and delayed Delta we've So Omicron had recent

People market. Theaters to to yet hard of thing see don't are in think I the the office. comfortable get. other over full; of things couple games back York -- out New is coming not empty I doing of lot lot last certainly you've And the seats. NFL that's in The playoff the there restaurant they're person, reservations are all are a weekends. tight watched the a labor

with the But willingness them metrics, from do hear employees having all hired that market leaders' before turnover about pandemic the that do retention they've training have work. that at them, versus difficulty be is new So concern. the pandemic -- employees post think come for were when that rates tight look concerns employees, they were I in had, CEOs -- the impacting labor to business been about aggressive turnover company the back employees their have more to these of rates I

had And amenities that major technology that corporate have as workforce that at service on look yes, and side, firms. even space, the the things, they they describe was I by spoken many the in slightly all And leaders spaces companies, technology of pandemic. those before all many, on kinds all food we collaboration all the the with provide, remote-enabled before created way, they're technology because of at pandemic a would differently with they the the going that and

what is is -- in I So of companies or the industrial driving by those think It's landscape. across pandemic other the kinds migrating across strategies the industry industries.

I have a couple comments. of additional

Yes. Bryan Koop.

about that days refreshing that Tremendous leaders of back design our to team XX Bryan work time at first to to in obligation, of to is past C-suite intentions on the as is a humanly the no the XX real a by from who tour. the and things the from coming wouldn't tours has are the XX what Koop work much seeing, see there's with unusual highly A longer was fun this we their definitely sure it's And in for really Boston. tour, a And coming earlier, amount many been we're believe accelerated of these been more and players, started this back we've an that as lot definitely want leaders. realization, on would "You are. far proactive leaders and space, our many people, going to is later. as in proactivity And destination. a last team has ago, them. et there's of think, of but going done make going, goals many destination trend possible they are over they the a really who's tour." cetera, departments, is And what where the having probably noticeable leaderships every all change there come in XX comes They're it as

occupancy on follow-up guidance. you've commentary is question not the second basis embedded you My positive leases Great. Doug, your a uplift from XXX points signed commenced. had mentioned versus of

due number also you basically that quarter. from of Is do from your leases -- current a guidance leases you terminated think occupancy prior just increase expect Or midpoint. plan purely to at termination bit the the flat you to increased sign? that little But as to timing kept well? levels this I

sort we're I give It's to I'll John, of actually is -- just the you the kind XXX So manifests, of of example of how XXXX. that the rent at mean it's have of on when upon actual be. the of in have commencement timing expiring lease XXX%, going that sort -- based working Avenue latter and it Lexington we sort -- right? some we half

in on how to them of term XXX,XXX of of when paper revenue. XXX those out going months, square that X between recognize tenant it we're is that's discussions XX like lease shake to expiring. The whether to to We end up know forth, or of space as difference is. and to are is they're -- or is able terms take space feet are demoing already delivering with in moving the going negotiations, as back I the things not potentially, a to don't then going we out and

is those we will, quirky so sort for the term. the our in which of year, that it's it's coming we is number hard short going and think, in not to space term, where have going that's that's larger it's to long occupancy. transactions, is if numbers. going kinds signed, because I larger revenue thing So move yet about, going me But impact leased hear it's that a that into amount many we in you of have on a of great suspect you're is and -- talking very That to -- us to and occupancy and gauge grow, I very contractual it's is, surely how of as that

Dear of from from America. Bank Jamie Feldman next speakers, our question

load assets, a in All environment? it going Or more for business the Great. just it's this stay kind improving Is to your history? what your and CapEx talk competitive versus always to this the and is are how to of business you new run similar CapEx thinking it lot been? about cost about cost to

mean CBD much a be, X where cost of portfolio, I our you to we've just look already, So money the major right? of of I we right? so and think -- been of to all I it's go, the time lot a you will -- the new Embarcadero this project Center, is occurred, example, at EC which for our spent if lobbies what at we has X, -- it's When X. because rebuilding and I X, for lot because done think it's it's similar doing probably important. assets, don't bulk mind the

If rebuilt you at unusual Street, created go of this to see XXX place base you we the the that building. and really Federal

were look York City, to doing go on consistent work we at the The that the that this If been at did was and you we've facade lobby Avenue to Lexington at made what basis. XXX, Hugh, the and redo with a XXX and of changes you the New with done XXX

you're to want the way to in So that on major see all do are to think I of we basis. a a our change continuing to consistent buildings going don't

CapEx. see to going And spike" so be think I to do don't a "big going it's in I think consistent. But you're

that we it think way. of And

refreshing I mechanical your earlier, your upgrade amenity about We to elevator got is for buildings. thinking be, maintain in think been and for conferencing and year. real X in a destination, and tenants past buildings to up years, and the General the right? Motors which for your the we've at this literally lobby what opening working You in our be beverage. as well of your about systems, perspective, amenities have it's entrances, have We've how And what both to, be fitness those major their building your that on end as the center systems, from calls building, at going health we're you can going change and talked a hopefully, it's and doing food

to just we're anticipate think think doing it's I increase. So that we're should -- anticipate to going stop, everywhere. that I somehow it's like you just going should time it's don't you but all that And don't the

of think terms about TI affects load, people more you that the necessarily? space, Okay. wanting And comments or your just do in common not

Well the you, X board. tell reasons -- TIs there I can are going -- across up are TI and

to right? The And There first expensive increases competitive. the today. more is for more seeing escalation on build out and two, a any space, of market, in that more it's economics therefore, kind competitive insulation more lot significant. the TI are available I side we're mean it's the is very space are a

what contribution their is up making going in to And to so our space. the tenant be for even ultimately is putting that not

with is of associated chain of across are challenge, of industries So part amount issues kinds people the trades all of the who same the sort it's labor. the all supply and and of kinds and all working which

to in do a been they terms made just for of And you spaces that sounds expansions people Or even out It the figure saying on decision? I do for do time appreciate going people think lot at needed flat already? maybe they're has about generally or tenants the you think as like of Okay. that, you dedicated goes What think then on, your spaces? that seeing. there's that's decision something leasing least have Do or comments. more, hoteling sign you're are up

that every that sharing that are have going are not meaning space to is think be available space. to who will they person every I So have companies there some necessarily there's of to predicting day,

but it's to I entire I think think margin, for on be not it's of for it. and that components certain I the going the organization, happening, be, absolutely it's it's going to think,

me let So example. you give an

dedicated a XXX% think business. offices. customer are in And managers I management asset have to have going portfolio their We the who's

think I of to they be want don't to to going have those they who to you're people those go have not group types side may who and can a their of as space permanent they the in see right? in go necessarily they but -- CBD may have take technology location, a are home I that just if in seat, are a some suburban people business, where place of anymore have made. decisions physical being when mothership the a a they'll work,

day-to-day are a large we sign no are space people they're and seen that we've decision going to have allowing to on -- to their them to I But on saying, okay, by very have physical dedicated companies a basis, longer little up daily basis.

be tech Facebooks again, their people want groups with or as to you're know want earlier, to that the their being seeing encouraged not you people, and you're want the you You're have be continue to We're going seeing come encouraged when to if physical said place come Bryan to work. work, companies. a you're to going to or together And Googles where those large the there.

Sandler. Piper from Goldfarb Alexander from question next our And

Great.

big-picture get Owen. the this normal? normal. gives to I and normal year now That weakens lease and space? part back do need normal. year weaker the then new point more of sort tenants we're maybe the of company, but because companies a perpetuation economy And on, now curious this So say that to the stuff, going I'm of leverage, Mike, all training we X as say, people absent do use of guidance of question. And office, I one, the new X the questions, And how new adjust third is we're market of that a space on sort we understand new for managers what need culture, the suddenly this to suddenly at or sort labor

to a lot But we clients of statistic we about keep in-person Yes, normal, a we've predicting our Yes, Alex. to about Again, clients think hybrid as new fourth leasing I office talking an over over need don't talked don't by offices, X.X I us. feet. there and think So employers that's they I work from commitments? and anymore. again, -- the saying, are again, people more million and look, I for going this full-time levels work. the -- see see our there's we mentioned, are their fatigue. think many workers is why to these of back If the pandemic today, square as making It's we with lease employees for way, office. their quarter use prepandemic And I bringing weren't

the comradery, think it's hear employees across wanting don't that you the but is the very training this I true goes of learning, -- for back to come more more office. board, think they the and in I anecdotal, for the on that

into in we change. position to to when progress we issues our cool serious some going they of Omicron will this to Look, need think variant very a where XXXX. do will of these I as this see increases some and be health We fall in closer So census, were need off. that back last started security we to winter and think on spring get

a Well, there's X-parter, there's front, a mean COVID sure. Mike, fatigue. on so and X-parter. on Guinee -- channel ] mask [ for to I the definitely guidance That's John it's

if guys what So the do in elevated guidance? would impact first degree is that the And are of you dispositions, guidance? dispositions

the or of missing third mentioned million is, The $XX $XX quarterly next to go you on that the call, annual? And parking. Is then on finally, quarter mentioned million you recovery. COVID

that is in how curious just your much So of XXXX guidance?

quarter. the $X I case. With improvement short. couple and quarter, the million $XX of to that there's just a say, an it that our We $X indicate put in, not a press So don't acquisitions. million similar of still dollars was of a to happen, we're never don't is going we necessarily parking, dispositions to we guide kind release, no it they're $X.XX million we've respect seeing know million in to and been when dispositions in because And of kind would We that, the between guidance. and

and going bit back. to we that quarter, about we're a in is expectation back, step again. the later think talked of ] [ little little that. a there's January, first in may to that improve take our Because first I quarter, of a step a the been in bit But Doug start see

So that million [ of some the get certainly get ]. will that, I we'll $XX not entire we that out think

And call? third the of about the recovery $XX what on COVID that mentioned you million quarter

about we're we fourth parking think again, you earned is quarter at about is look if million the -- I $X million. $XX that We've Hotel million. right at got, $XX hotel, now.

should It million be million. $X $XX annually. So that's

rest And $XX of is million. that. that's So retail the the then

that So it's much about from $XX there's I million. in retail, think And I don't 'XX. the think

retail on some come I where in, we're in working where to the is going 'XX. we're think that income signing big we've got leases

I much won't of would 'XX, that we but So get our guidance 'XX. in in expect come that it in will

Okay.

So go basically, now? $XX million to you're at

Yes.

a have from question And SMBC. Anderson from we Rich sir,

about do where you go what's talk of the is Can But for clarity So you a some lot at brethren way angle you hybrid, you on. things? making have know, in entered that let's some think would maybe more strategic Seattle, other you office maybe point we don't Sunbelt believe be term the future. the some how and of you Boston going hybrid shifts sort so see about of say if Just or a long been close about comments helpful. perhaps your multifamily get like market on in office, -- words, some doing, of Properties any in to In about of in capture future that you that the in business? residential

Yes.

the is the potential. Seattle's in in country, is we it did of business, of science L.A. category. felt we that another. businesses thought another, and have think because our gateway Seattle enter which a we markets well our growth that life we have We have And strategy, one, through perimeter is strong was

a have that primarily off control. multifamily has have sites also under been that our We we business slowly, growing

that I have. we So building the But our we're sites we of markets multifamily. of we of have going that devoting capital And certainly our growth described. in investment interested to a in areas in and in perimeter wealth currently some be would core these be to additional out opportunities

just at the one. do perhaps of quick then When on were made you And what the you of a be observations all enough. to portfolio, up the aggregating mark-to-market the today. Fair And rent Okay. comment today? growth, that market kind estimate look a entirety

moment. mean I'll financial result mark-to-market a exercise what the me the think is. mathematical just the tell let at my is folks quarter. what do I just current they know it's I that we every don't

in It's somewhere X% around overall the market.

are we -- continued aren't that they any life that up than be gone this there And before. in year mean calendar But use in than have more markets and rents City not York that there's of New our going enough concessions is the doesn't up. supply example. much rents across let's poster think about going probably aren't on to projecting there's mean down, We've as talked science -- child pressure. I in other a XXXX. going the currently We the business market growth

rents where the XX the you And a cut concessions that's a And about to talked tightness feels in gets a overall like high-quality before, or vacancy then XX-year we've getting cut. I will deal are. a That Midtown are there's raise start to the building the can rise. -- think there -- not we're rents in When what Manhattan. market, a when are yet. deals to point the in everybody knows relative where where there rents

our expectations. we're So I think honest about being

we're continue the Again, for we're our buildings growth. to portfolio, our of what And in California growth rents, Obviously, into where the capital portfolio our market the in into like the bulk Street. we're embedded Center the and XXX and Clarendon availability suburban lots there those Boston is transferring in embedded lab buildings. CBD tremendous, getting And well. portfolio putting of Boston Avenue office we XXX building rents have our were it market Prudential also downtown at Huntington seeing as in in and

prospects relatively overall sort short-term drive we're that any So recovery next to for feeling strong upside, but not the a good rents speaking, mark-to-market continued, in year in of we're market the further. about anticipating

Caitlin from Goldman from is Sachs. Burrows question next our And

the big how the just quality value-add question office for Maybe quality with balance And that buildings, more then a tech having a the of opportunity Wondering the South? broader of the the value-add project? to obsolescence in despite retenant market, it making XXX development like it like how end on risk Park BXP represents and creates comes Avenue maybe do development. you a opportunity, opportunities with that lower

that I case by is Caitlin, think the answer case. to

those trying like we most about create are are can have think tasked return day, one -- we end described at XX% deals our Park sometimes of our Avenue We find we to and that -- how we XXX pursue the our disciplined are we're of of -- Doug the requirements. and -- deals that with regions top of that all opportunities invest and South, earlier, capital that the those buildings

sometimes stars XXX, get And the and sometimes we and like they deals don't. all done align

So deals we're chase some this remarks, I said I have we'll going my in continue And that as more year. them. to every to do anticipation

the going I do think necessarily some are opportunities of be to not empty buildings.

Yes.

to unique and roll And creates the I opportunity great add, the value mean up improve that is from is have it one asset really there a Safeco rents that little leased. right? time. to perspective for this a a was blank over it's opportunity and the XXX to thing, rebuild another slate and us But was Plaza XX%

underwrite to can we very, we're return interesting at, have and said, that invest and very disciplined way we Owen So try opportunities again, as a look out that that capital figure we the looking and for. generate

is so same a leasing past And give the on some following one then Got faster details rate. occupancy peers down, that But of to questions. up on the know maybe move-outs property encouraging same-store I you so same-store progress. on far far, happening suggesting all are occupancy it. just the at continue and

So driven of could expect change? that, I do has on progress? further how same-store? And wondering guess, What the some it offset to leasing you if give just detail you

a on pandemic, we're So of activity slowed is, in XXXX, velocity my view and down. this during the middle leasing and

decision to made there did we that so leases replace during else, a the during that had were And already those going that tenants velocity tenants somewhere tenants And expiring right? in to that have XXXX those not we were that moved time. had portfolio time. was So And that they out. move at

to occupancy started our a you bit, So same-store right? see slip little

we're upon the velocity acceleration next the of expiring. years, what what of a we're what description than higher seeing be And is went what over seeing expiring to based now have going couple And that leasing through an velocity. we is was is Doug

our start we're that those leases. to complete occupancy as same-store the increase going we is So expectation to

really XX the 'XX our to our stuff show occupancy to from And seeing kind up be the my in 'XX, occupancy signing XXXX in about So velocity it's to right? in in the acceleration shows XXXX our and velocity -- going months, the getting leasing X cycle the in slower So a and in that of we're occupancy fact could XXXX. up view. that in is lease

And Mizuho. from from Malhotra now your Vikram next question

other both given and case picture San anticipate on still more you questions, my markets? and recover lot New downswing the past, X that cyclical you're Is maybe of the Just have faster say, to answered. bigger a upswing questions that than, seeing sort In you've is commented it still Francisco been the York. in of and what hearing

of in San ground San sort I percent just clearly think to much mean of the occupancy distinction increase I CBD Francisco has Francisco would everybody, XX-plus I the technology rapidly. make the companies. embedded potential more are is to

pretty utilization to someone you that composite, had a the got space were the with correlation. decoupled NASDAQ pandemic. If -- of chart pretty -- there historically in put XXXX a strong It if up a and showed been there's

technology I Greater the very been can dramatic as periods be And but of is markets that And said, typically have years. you in companies leasing potential X so what past absent largely very significant, for can't demand Francisco short can I in tell the the from sectors, -- San those it from and be the it time.

frame I is. that clearly the XXXX, or forward time would So tell San dramatic going Francisco's right I you think could in think XXXX volatility have you whatever positive

a led demand financial but growing has New City a base, it's base. services, still professional technology services primarily York

it's San have to And relative recovery a more so granular going to Francisco.

So that's how sort both about we of those markets. think

just flex. for here Most down still you by Can equation? tenants? maybe more Okay. there's like in thoughts some more the go BXP to you you piece And you us Would then your putting other changes of partnerships maybe of going how FLEX from flex going to leases Or much new signing where be with this look providers capital? tenants road back Is signed, bigger but a need the long-term from to have here? are does environment FLEX it give on on?

Yes.

we larger believe said it's users. market here small companies, think a we've created for and So prepandemic. to flexible And We in before, as Vikram, was also that's workspace. that stay

to refill both there that's operators. the other FLEX well that's space it's of but space provided that the flexible What I going been as product. needs to as -- needs to be market, own space an our out like percentage think by the something flex single-digit is important the a happen

are tenants Given if the of because the occupancy to pandemic, office offerings many rent pay don't to. less likely went flexible down have they

that occurred. So

what's to decision by decision how future to investing BXP. this happen see is capital space and our additional revisit in We're market flexible not think shakes refill. But FLEX recovers. that it's we're out, going going I as going now, market office today. that's in the quarters Right to

going capital make to just say, most from a we're put space which to, take last Ms. someone I'll one lease or is lease I and landlord the flexible there the landlord, transitioned the Mr. of your we're are going you to be philosophy to that into space then who I their money we'd to to "Hey, would to hotel comment, And it of find operators are new be become in going that and going hard we'd have, a in, like we're to else think chains, right? to And landlords put to a and going enter prepared to all lot partner," management AKA, love so arrangement.

tenant of have -- all there lot by of of the and Now -- that basically flexible orphaned are let markets the the landlords. spaces our obviously are land in go in original original hands a or been now space

many I'd those that myself. well, in has so cases, landlords where say, not occurred, And this may operate rather

with installations you're contributed see who And Z this. I'm the deals. see think to are new my going Y So to going before company prepared landlords happen become manager you're let and management going to that being I basically market to for X, do to

Just to mark-to-market? is X%, you that the comment clarify, cash Mike, a the made,

that the for getting plus took you we're every and rents of is if buildings today said, portfolio one the what we X%. today with mark-to-market, today have whole think and we the market these the That's rent That's what approximately single is.

space vacant currently space. that's all only It's the And leased. it excludes

from question our And Morgan Kamdem from Stanley. Ronald next

Great.

quick for me. ones X Just

talked going in what last D.C., and the seeing color market Any about trending? Just update, you're the you how some to any concession there. I trends back think quarter, of that's

a Well, right the one I'd tell back this I you for like you. and to I think don't Jake, total been are answer, recovery to levels. that's there's right? XXXX But concessions think is

say that that to would I are correct. actual lease That's remain though extending. the escalated. the continue Yes. we seeing is What are concessions terms

in So a times, years. we've sort lease wave in rode XX concessions, but of lot foot the of north of of a $XXX excess are those terms

rent for And is just when not right? It's referring put of downtime rent, So lot the and the cash. free beginning in there's clarity, with the our Jake that is some be commencement concession associated tenant both to to lease. a improvement in would new

Great.

XQ just Just second one clarifying sort question, guidance. of for the on

I that think you a drop. seasonal mentioned there's

-- -- So if of out debt for I $X.XX, about you the the back XQ you the extinguishment. back sort if 'XX, think of had out you if sort

all $X.XX sure right. the else of sort the Or that from to was just the of it? than that's got make I $X.XX, there in want hotel anything that G&A So there out? other and to baked you called that I was

of hotel growth offset and be it. I think $X.XX will that it, that portfolio and between G&A the some there's and then the in $X.XX the would

And negatives difference at than I the and so right, are think, the the on the the greater, hotel $X.XX G&A the between, and $X.XX midpoint.

there a So from little some portfolio. too. expense bit positive things Interest lower, are the is

Johnston Derek from Deutsche question next our Bank. from And

you the more or we're in the legacy or to the York this So JV. by evolved City secondly, projects? thoughts could acquisition intrigued has Avenue really, of strategic design versus prepandemic submarket? how repositioning the expand XXX asset, and discuss And maybe the South amenities, the New Park

going Hilary in interest want Owen, to But comment So XXX to of allow that on our in our about just South. sort talk Park plans I'm you make a do marketplace? for to Avenue expanding

In It's Yes. York and it's a all -- Xx markets Well, than New York as that it's in. feet, market. we operate a about in talk the New bigger of square itself. and got we cities all other XXX of number million

going said scale for prior market entering New and Midtown Boston new based going relative on I've like the into relative York's a is other all So Properties South calls, its scale into to -- cities. -- on

very the South And delighted about the GFC to York, an technology, for in lesser since a and sectors, deal the to think important New market participate and some life business we Hilary, York New X been in primary extent of a companies. plans building? And you the Midtown do complete has in. talk to those has to growth in we submarket been of attractive an science our be office the XXX December. were district to of important want able to that's

Sure.

in And a be be will South. that the of both Owen we prefers and be places. Midtown tenancy attract common the So located tech as undertaking marketplace said, of to building to the We're the the areas tenancy for terms repositioning in of tenant and space. terms in that will media that complete seeing already asset, tenants the interest designed, systems from and in

all purposes, will and finished the a And so the systems it, the in with building, and intents of terms finishes. for be, building when we're new

country. perspective, Properties New the Boston across York in I from rest the it's with so that entirely of And think and what owns consistent

submarket So be and tenants the submarket. is prefer the distinction here to just in that officed of that the types

to really it And take And XX%, And what guys, see happening slim get the me. are there office XXXX? please second Okay. XX%? you will with question, bear in so do pickings, to back utilization that

work and it allowed is and the if agree that up is XX%? days office utilization to a from Or management? I with So week, to on -- week, XXX% with do is if home X days I agreement hybrid here you I'm X show office to stay, a my based

Okay.

to utilization to work but the their will utilization question coming I'm being is depends answer way drives the utilization about upon the they honestly be your that more cheek, in think that's technology the somewhat answer. of people The way tongue space. people and up. I So define thing think

So the how way It are we seats. many with there a to there there think card about those in building, than seats may use and be well people on it that very people a basis. how access are many seats particular use are those more seats daily is

XXX you XX% of have your to you employees using but XXX% that only floor So example, basis. be out, of you on going daily seats cards may for it, have utilization you're space, XXX give a with but if a on

So I until use individual could think see they where certainly somewhat the are math get XX% understand used. every cards hard only days that's there, companies single to is are their that being space, really seat we and to the choosing how person we situations an are for a going have because feel but be those to assigned you utilization has

for than be we of see number so installations have of the cards or seats may they they the On number. you'll number seats the have other the full access overallocated number a where they hand, more have, times of not, may higher and --

on going going it's these they're their companies decide to is own judge to how to So use very what be difficult with going until respect the what's philosophy to space.

Yes.

there be So X, what Tuesday we'd on collaborate. the be point would because work do just to want add I have hybrid each X them come and day -- in seeing so to and with utilizing saying, with that to why a to people are what an you we're important clients Wednesday X, Doug you is you certain but is, week, they're a look, come far said to a or like a days other want in You office? like

so day clients so of taking and also -- a that's relates are I it because work. least Friday because office. human think to the or in look middle to or hybrid it be and week policies if the at the these of you X but at our talked preference think I more because of you everyone the about, trend as than companies is that our -- of that in want census on Monday And it's Doug And always for lower

question next Lewis Michael from our And from Securities. Truist

asking a point. feel this almost question I at bad

the work, would that a to pushed companies gets longer that's Or to back, And a if for figure this be point, things touched appreciate you cut I today, think back pushed thoughtfully I on Or do to on a the at that I from causing came earlier, wears today have simply kind office to implication more is return you still potentially see of every company they to their example, do supposed longer? of little tenants when all leave duration relevant? a we or as demand So headline issue? the timing It's Basically, if to it So the I'm office time going that would been that's there's pushing a Day If demand versus the one. is stronger Labor ask returned answering have space? stronger gets I -- think out at demand return are you risk that point, the summer, questions. losing your think term? for today? just is less something but time concerning. is and back kind been this back at

tell space. I less terms employers in would think relevant So of you that I -- about it's how are employees thinking their

I think with more on it going companies. movements that depending the becomes upon particular labor challenging are

from, kind is. are okay, we or is work are think not things as more a to in right? to margin, saying, implication because in but So per of coming the we'll of we of on them space time market, delay jobs the I people the need the remote and short and are pressing I se. they Because them impacting going fill where the dealing companies with term, business mean the with amount more they're in fill impact location, itself that takes in that way, their a than space -- space, where And a on have labor are what planning there what fill their that their particular home from that it's term I having fill the model and a is this in short more mean, we're to organizations is aware the their date those want be has challenging to jobs. utilization of the someone so I think can't

from Anthony Barclays. question our And Powell from next is

about when this could of how start limited of lot if some online? buildings is markets. office so, to for come type? lead dynamics? that given in office a of of construction increasing talked does that to the cycle your most new maybe you You prime Do Or demand there's of buildings And another that rent think

the in mentioned given about I the down my future, uncertainties do office grow. this do to think demand today, demand it doing new office slowed as "driving be is I But there do particularly on I the don't as and being think of space be pipeline development". think of that ourselves. We're technology development some think for given science I very that pandemic, And discussed to new, those But will be the life we've as remarks, general. new see at development. companies I whole it call, a attractive and in that, in customers, wave there said, I least will it going

on And just more one pricing. maybe

rent. that have I you think you argue And pressure that the year go the positive. even don't That this someone to be more meaningfully rents up spreads there the vacancies. given really on been mentioned expect, guess, said, uncertainty, I should given may lease

leases tenants, the go So do market new now. all of Or you the pricing people do accept when uncertainty the discounts? I'm you around and trying kind about typology given to tenants negotiate office take right get with the from just rents curious there?

good transact once feel so is. discount at understand at may at whatever clients every what we in to be at, like just they that may what put going choices premium upon something say, are a be our a rationalize Look, point. are, on of they are deal some discount else the depending some transaction, or able space to it if looking premium and they're we Most they they're or And this of every do yes, their that is getting are the time. market we're they table, a at of different. Well, to perspective that our a that they number

doing So the the much point is. are to we tell of portfolio what we where costs. for sort quickly time. give get much a with where able but better if in volume, or be to own the That to, know with look, dealing we into I at have any deals, prepared enough this things there's sort is ancillary somebody we is volume we're who's you, you XXXX, is enough available is. that's -- the meeting to today. how again, what it's rent ready this one how is our concession -- the is is in deal how This worse are to might transact. because transaction transaction market package This minds put And of is where we can this going you been there there's of can't downtime

Daniel Green And sir, our Ismail question from from Street. last

theme. your increase submarket back to within For or that quality sense go for more quality the does to today move the just tenants are much better tenant your market? around likely Maybe mobility space? space is a city it How leave a to a example,

coming, be bit little the sort on were ancillary a from areas that some of is I I the considered guess San think side than the -- marketplace. so very as up and a attractive has perspective smaller transitional Francisco edgy let's are and that Right of just geographic use sort of now, you're market gotten core what seeing less example. to and the the

to has of were has it lot transportation it that access think it the will described, do access are San to Owen amenitization of slow the with in come but to I be Francisco, of which in back. Obviously, a things streets, terms -- to and things amenities. the

nearly like that's is And think would not probably that, Third as so I interesting tell is. in I as York. construct that place similar New probably Park Avenue you a Avenue a

there's a lot more market And a to necessity to there's Avenue has better Third markets the again, interest. hot a where activity, sort my in like And that our markets, peripheral and not -- get Ray, comment and if don't go markets. buildings of But means core of softer, any the lots very that. Jake, generally of spaces, colleagues better Bob, the would Hilary? leasing on know I to as

outperforms the saw both that in we're coming in in of that in think unamenatized may campus Well, tenant is Doug. portfolio Town an there to our urban And rates. suburban deal terms case especially Reston, attracting rental and back the Reston occupancy, We clearly be I core materially the Center. flow

D.C., in point. poster really the So perspective Reston from that our for is child

then deployment either instance, you that XXX rule term? maybe in the near capital does of For And you concerned versus interested Does for near that in the Hudson one impact Right. less out term Madison? those just BXP? X projects how any make or in perhaps or more

anchor square the deal time. on forward evaluate of all over I million is the I at do economics been that go with feet, I going is think, of increasing of that, will it -- Danny, Hudson, and saying, tenant that project size the think time. an new answer at the and in to at X to it X.X country mean York. was question to facts we'll as New that depend we interest given the the want we've

So up. But to access Hilary have into it's there can and economics consider direct in going that have quality, forward. again, we've described, everything we at approvals but the transit. talking a brand-new help on got that And It's costs It's will then XXX, are rents. as to got Doug we're some additional call before been on about time. that building. place the got going to the put we we've assess demolition of described this

was one I'm if utilization last -- give mentioned rate can heard just portfolio. I York. just if the believe maybe New for XX% you And for Mike, then correctly. if you And Great. total a you me. curious guys that I utilization in

frame. Omicron, we XXs of high in York in City time kind So New before November the fall October, were the in

started were it it seeing basis, to anywhere we're the it's is to of week, XX% rebound. slowly. and in going the sequential going up. one mean and was it week I third November. not relatively On swipes But XX% our up January. precipitously. mean second any number it's first, card of I in in struggling markets close of dropped It's but XX% to We October get to up or each probably where a

will turn Owen There are comments. call questions further no to over time. I closing the for at this now back Thomas

your questions think interest will you. Thank I I and closing we've said comments, all no for of and enough operator. you thank in Boston Properties. your There be

Boston Thank This you. Thank conference you participating. Properties' all call. concludes for

disconnect. You may now