Tenants want top-shelf office space, and BXP executives say its national portfolio is primed to help them fill it.
The Boston-based real estate investment trust completed more than 1.8 million square feet of deals in the final quarter of 2025 as U.S. office tenants increasingly return to larger deals and longer-term commitments — along with boosted attendance mandates.
BXP, formerly known as Boston Properties, landed more than 5.5 million square feet of deals throughout last year, a volume that helped boost its portfolio leased rate to 92.5%. CEO Owen Thomas said the company "has every reason to be confident that the positive environment we're experiencing for leasing will continue into 2026 as companies are expected to grow at double-digit rates and accelerate beyond 2025 levels."
The national vacancy rate of about 14% has largely hit its peak, according to CoStar research. While U.S. office leasing has yet to fully recover to pre-pandemic levels, the 12 million square feet of deals signed in the third quarter is the most since 2019.
The uptick in leasing over the past year has also closed the gulf between occupied and leased rates, a residual sticking point for landlords that have struggled in recent years to backfill large blocks of space that tenants ditched in the pandemic.
Yet as tenants flip back into leasing mode, their attention has primarily been concentrated on the highest end of the office-quality spectrum.
"Companies are growing their footprints, upgrading their spaces and executing long-term leases," Thomas told analysts on BXP's earnings call Wednesday. "There's been consistent strength and an outperformance of the premier workplace segment, and given these positive supply and demand market trends and our strong leasing in 2025, our target occupancy gains remain achievable and more than likely."
The landlord's sentiments echo trends rippling across the country in which the yearslong spike in vacancy rates has finally plateaued and, in some markets, is beginning to trend downward.
Ready for the 'good news'
The landlord, which bills itself as the largest publicly traded developer and owner of premium office space in the country, has a footprint that spans more than 52.5 million square feet.
The company's portfolio is watched closely because of its concentration in high-end markets, including New York, Boston, San Francisco, Seattle and Washington, D.C. Each of those cities had faced some of the steepest leasing declines and a slow return among employees getting back to offices over the past five years.
In a telling sign of the reversal in demand, if BXP didn't sign any additional leases for the remainder of this year, the influx of signed deals set to take effect is enough to keep occupancy flat throughout 2026.
The developer has about 1.25 million square feet of leases on vacant space that have yet to take effect, not including the roughly 1.1 million square feet in the final stages of negotiations and another 1.6 million square feet in what BXP President Doug Linde called the "discussion pipeline." BXP estimates it will sign at least 4 million square feet of office deals through 2026.
"The good news is that we have lots of activity and we're going to be doing lots of leasing and we have begun to execute them," said Linde.
Off the sidelines
That outlook has given BXP the confidence it needs to ramp up a disposition strategy to upgrade and add to its existing portfolio.
"Office transactions continue to improve as more equity investors become more constructive on the sector and financing is available at scale," Thomas said. BXP is aiming to close more than $400 million of deals this year, he said, a figure that could rise as the landlord is open to "exploring more sales."
The CEO added that the company's disposition plan is intended to "raise capital to fund our industry-leading premier workplace developments," such as new ground-up projects in New York and Washington, D.C., as well as increase the firm's inventory of "premier" offices in the company's core markets.
Institutional investors are largely coming off the sidelines, helping to send office sales volume up 20% in 2025 compared with 2024, according to CoStar research. And in the final months of last year, more than $17.3 billion worth of deals closed, a roughly 43% spike compared to the third quarter of 2025.
"Our clients are growing and are more intensively using their space, creating increasingly positive leasing market conditions concentrated in the premier workplace segment of the market," Thomas said. "New construction for office has virtually halted, leading to higher occupancy and rent growth in many submarkets where BXP operates. BXP is very much on track."