Good day, and thank you for standing by. Welcome to Q3 2025 BXP Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Helen Han, Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to the BXP Third Quarter 2025 Earnings Conference Call. The press release and supplemental package were distributed last night and furnished on Form 8-K. In the supplemental package, BXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G. If you did not receive a copy, these documents are available in the Investors section of our website at investors.bxp.com. A webcast of this call will be available for 12 months. At this time, we would like to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Although BXP believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements were detailed in yesterday's press release and from time to time in BXP's filings with the SEC. BXP does not undertake a duty to update any forward-looking statements. I'd like to welcome Owen Thomas, Chairman and Chief Executive Officer; Doug Linde, President; and Mike LaBelle, Chief Financial Officer. During the Q&A portion of our call, Ray Ritchey, Senior Executive Vice President, and our regional management teams will be available to address any questions. [Operator Instructions] I would now like to turn the call over to Owen Thomas for his formal remarks.

Thank you, Helen, and good morning to all of you. Our financial results for the third quarter demonstrate a continuation of BXP's positive momentum. FFO per share was $0.04 above our forecast and $0.02 above market consensus, and we raised the midpoint of our earnings guidance for the full year 2025 by $0.03. This past quarter, BXP also completed a very well attended and successful Investor Day, during which we provided a detailed execution plan on how we intend to increase FFO per share, fund development costs and deleverage over the next 2.5 years. This morning, I will provide a reminder of the action steps in our plan as well as an early update on our progress. Our first goal is to lease space and grow occupancy given the modest rollover exposure BXP faces over the next 9 quarters. In the third quarter, we completed over 1.5 million square feet of leasing, 39% greater than the third quarter of 2024, and 130% of our last 5-year average leasing for the third quarter. Year-to-date, we've leased 3.8 million square feet, which is 14% greater than the first 3 quarters of 2024. As we have explained on prior calls, leasing activity is tied to both our clients' growth and the use of their space. As a proxy for BXP's client base, over 87% of the S&P 500 companies that have reported earnings this quarter as of last Friday are beating estimates. S&P 500 earnings have been growing for 9 straight quarters and for 2025 are projected to grow around 11% to 12%, up from single-digit estimates last quarter. Return to office mandates continue to grow and take effect, though the West Coast lags the East Coast on this measure. Placer.ai just released their office utilization data showing a material uptick in office…

Thanks, Owen. Good morning, everybody. So it's been 6.5 weeks since we made our presentations at our Investor Day, and I'm going to begin my comments this morning by affirming our expectations relative to our same-store leasing, occupancy growth and bottom line contribution to future earnings. As you probably noticed, our beat this quarter came directly from better operating portfolio performance. We have entered a 30-month period of very light lease expirations, 60% of the historical annual average over the last 10 years, and we've now reduced our '26 and '27 expirations by another 8% from 6/30/25. So the total expiring square footage on our 49 million square foot portfolio is 3.8 million square feet. During 29 of the last 39 quarters, we executed leases in excess of 1 million square feet with this quarter's 1.5 million square foot performance added. We will surpass our goal of 4 million square feet for 2025. Mike says to say confidently. As I described in my remarks in September, leasing vacant space improves occupancy and delivers the highest contribution to revenue growth. During the first half of '25, we leased 810,000 square feet of vacant space. And this quarter, we leased an additional 490,000 square feet of vacancies, making this the seventh consecutive quarter of between 400,000 and 500,000 square feet of vacancy leasing. Post 10/25, so at the beginning of the fourth quarter, we had 1.8 million square feet of leases in negotiation, which is where we began the beginning of the second quarter. So we have continued to replenish the pipeline. The space under lease negotiations includes 650,000 square feet of currently vacant space, 71,000 square feet of known '25 expirations and 450,000 square feet of '26, '27 expirations. In addition, we have active dialogue on other space that's not yet…

Great. Thanks, Doug. Good morning. Today, I'm going to cover some of our activity in the capital markets as well as our third quarter earnings results, an update to our full year guidance and some updates on our expectations for 2026 since our Investor Day in early September. The debt markets have been steadily improving throughout 2025, and this quarter, we opportunistically and successfully accessed both the secured and unsecured markets. In late September, we closed on $1 billion of 5-year unsecured exchangeable notes at a 2% coupon. If you include closing costs, the interest costs we will record for GAAP is 2.5%. This will refinance $1 billion bond issue that expires in February of next year and carries a GAAP yield of 3.77%. The notes include a conversion premium at a stock price of $92.44 per share. So if our stock trades above the conversion premium during the term, our diluted share count will increase. We also acquired a capped call to increase the conversion premium to 40% or $105.64 per share, to reduce the dilution from the increase in our share price. The capped call has no impact on our P&L or our diluted share count during the term. It settled at maturity. The market demand for our deal was exceptionally strong, and we were 5x oversubscribed. That allowed us to price the security in the low end of our expected pricing range and upsized the deal from the $600 million initially offered to $1 billion. We also closed a $465 million mortgage refinancing on our Hub on Causeway office and retail complex that we own in a joint venture where our share is 50%. This loan was executed as a single asset securitization in the CMBS market, and it priced at a 5.73% fixed rate for a…

[Operator Instructions] And I show our first question comes from the line of Steve Sakwa from Evercore ISI.

Owen, I guess I wanted to go back to maybe some of the comments you made about reallocating capital into the premier locations. And as you're looking at deals, how are you thinking about some of your smaller markets like a Seattle and L.A. where you haven't had the success in scaling those markets? And a, are you seeing the opportunities to buy high-quality assets in the submarkets that you want to be in? Are you finding development opportunities? And like, I guess, how do you think about those markets long term if you aren't able to scale?

So you're asking about L.A. and Seattle, where they are smaller markets for us now. We have a toehold, a couple of assets in each. They're on the West Coast. So they -- those markets from a leasing standpoint are weaker in general than our East Coast markets. I don't think there are development opportunities in L.A. or Seattle at the moment. I don't think there are any in San Francisco either because those markets are weaker. The leasing is not as strong. The vacancy is higher. So I certainly don't see any near-term development opportunities. And if an acquisition opportunity presents itself in those markets, we would certainly look at it. But acknowledge that those markets are smaller at this juncture.

And I show our next question comes from the line of Anthony Paolone from JPMorgan.

On a call yesterday, one of the other office names talked about just having done enough leasing in '26 at this point that what's remaining just may have a lower retention rate. And so just wondering how you're thinking about what's left for you all in '26 given you've done so much this year and just any risk around or confidence level around a couple of hundred basis points of pickup in occupancy you've outlined?

Tony, this is Doug. We are working as quickly and as thoughtfully as we can to renew as many of our clients that as we would have in the portfolio if we can accommodate their growth and if they're able to continue to want to be in business. I would tell you that our available set of tenants with expirations has dramatically decreased. So there's not a lot there in sort of the aggregate, right? I said 3.8 million square feet of space over 2 years, and we're a 48 million to 49 million square foot portfolio. So that's about 7%. Do I expect we're going to renew 50% of that? Yes. Do I expect that we're going to renew 60% of that? No. We are leasing about 1 million square feet per quarter if we're able to maintain that velocity, which I don't see any reason why we shouldn't. We will be able to meet or exceed the expectations that we outlined when I sat in front of you all in September, which is about a 200-plus basis point increase in occupancy by the end of 2026 and another 200 basis points of increase in occupancy at the end of 2027. Those are our projections. We're confident in them today, and that's what we're sort of sticking with.

And I show our next question comes from the line of John Kim from BMO Capital Markets.

I wanted to ask about the recovery in San Francisco. It sounds like, Doug, from your commentary that your high-rise product is not where AI demand is currently, and I'm wondering if that's something you plan to address. And also I wanted to see if you had any early thoughts on Salesforce's $15 billion commitment into the city and what that could mean for job growth and office demand?

Sure. So let me start, and then I'll ask Rod Diehl to make some comments. The AI demand is not a tower business right now. Although companies like Salesforce, I guess, are calling themselves AI companies now, so maybe that's slightly different. But the AI growth relative to infrastructure companies or VC-backed companies is really a low-rise south of Mission Street demand pool, obviously, with AI and anthropic sort of headquartered in either Mission Bay or in Foundry Square, right? That's kind of the world where I'd say the nucleus of that is. And it's unlikely that you're going to see an AI company taking a 25,000 square foot piece of space at one of the buildings in Embarcadero Center or at 535 Mission Street or at Salesforce Tower if there was availability, as opposed to going into, as I described, what they would like to go into today, which is shorter-term, cheaper, less expensive furnished space, right, which is really in what I refer to some of the buildings that were occupied by technology companies from call it, 2015 to 2019 during that sort of booming period of time. I don't think there's much we can do to position our properties differently. The demand for Embarcadero Center in particular, is really professional services, administrative services. That's not to say that there aren't a couple of small start-ups that have a couple of thousand square feet in a suite here or there, but it's hard for us to imagine a large growth component there, very different at 680 Folsom Street. 680 Folsom Street is a mid-rise building with 35,000 square foot floors, with 16-foot clear glass with availability today and more availability coming in as the macys.com lease expires, it's a perfect setup for an AI company from a growth perspective. And Rod, maybe you can comment on the Salesforce initiative relative to their contributions into the city.

Yes. Thanks, Doug. On Salesforce, I mean it was great to hear that news. And that was a fantastic bit right in front of their Dreamforce event, which happened last week, and it was very well attended, which is great for the city. So we haven't heard more specifics on what exactly that investment is going to look like. But I think being the largest private employer in San Francisco, making a commitment like that is pretty meaningful. And -- so we're eager to see where it leads. And as Doug said, I mean, the other activity in the buildings that's kind of driven by this AI push, we're seeing it as 680 Folsom. We're very encouraged by that activity. And just the overall just optimism that a lot of that brings to our city. So it's positive.

Yes, I just want to make one other comment on that, which is there have been a lot of articles and news reports about the reduction in jobs, white-collar jobs over the past, call it, 3 or 4 days in particular. And San Francisco is sort of the opposite of that, right? We are seeing growth from these companies in terms of the amount of space they are looking to lease and obviously, the number of people they are hiring. And you sort of see these tongue-in-cheek articles as well about the intensity of which people are working and the fact that they are working in premises all of the time. I mean that is sort of what we are experiencing from the technology companies in San Francisco as we sit here today in 2025.

And I show our next question in the queue comes from the line of Richard Anderson from Cantor Fitzgerald.

Can you talk about the percentage of the portfolio of -- let me say it this way, that leases that were signed pre-pandemic that have yet to have been addressed at this point? And just how with the passage of time your experience has been with tenants in terms of their willingness to take more or less space, space per worker, square feet per worker? How are those dynamics changed? And sort of what's left pre-pandemic that is still sort of -- has to be addressed by you guys?

So Rich, it's a really, really hard question to answer in a specific way. So let me try and answer it in a more general fashion. BXP traditionally has been leasing space on a long-term basis with an average lease length today of about 8 years, but all of our new leases that we generally do are between 15 and 20 years. So there's a lot of "pre-pandemic leasing" in our portfolio, right? It's just -- that's just matter of how we compose the portfolio. The fundamental important fact, however, is that if you look at who our clients are and we go through all kinds of disclosure in terms of who our top clients are, all of the growth that we are seeing is coming from clients who were pre-pandemic occupants taking additional space as the world has changed post-pandemic. And quite frankly, because so much of our clients are in the financial services, professional services, administrative services business, what is going on relative to those industries is much more important relative to the sort of composition of our portfolio and the growth than what is going on with companies that may or may not have taken additional space during the dot-com growth in 2000 or in the post-GFC or in the years leading up to the pandemic because that's just not what our portfolio is comprised of because we're -- again, we are -- that's not who we are. And as Owen has said, and you'll see it as we move forward over the next couple of years, we're reducing our exposure to what I would refer to as less of those types of buildings and those types of customers and clients in terms of the kinds of things that we are going to be disposing of. So I don't think it's an issue of any significance relative to how much "growth" there was during the pandemic relative to the Amazons of the world that was described in a couple of those articles in the last few days relative to sort of their pickup in the number of people that they had hired because we didn't experience that within our portfolio.

Doug, the other thing I would add is just -- and we've mentioned it, we just don't have a lot of rollover, and the rollover we have is very granular, right? There's no really large tenants. I mean there's no tenant over 150,000 square feet that expires in the next 2.5 years. So we just aren't exposed to some big vacancy coming. And the other thing I would note that Doug described in his comments is -- and this has been the case for the last few quarters, more of our tenants are expanding than contracting when they renew. So this quarter, Doug mentioned, we had 85,000 square feet of net expansion by clients that we did deals with where they stayed in our portfolio.

And I show our next question comes from the line of Nicholas Yulico from Scotiabank.

So I know, Doug, you gave a lot of detail on leases in the third quarter and even some leasing in the works to address vacancy. But as we think about that occupancy build that you had at the Investor Day and the component there that is leases that address vacancy, given that the build-out could take some time, is it right to think that like by next quarter, you guys should be in a position to sort of maybe declare victory on the vacant space piece of that equation that gets the occupancy benefit by year-end next year?

I guess I don't think about this on a quarter-by-quarter basis. Our projections were done on an annual basis. We -- again, we have 1 million square feet of current leases that are signed that are going to be starting in 2026. And so clearly, that will -- that's the driver of a lot of our confidence relative to 2026. I also said that the activity that our team and I'll let Hilary describe it at 350 Park Avenue is above our expectations. Again, I think that -- all that activity will lead to leasing in '26 and occupancy in 2026. So 200 basis points is a pretty meaningful increase, right? And another 200 basis points is another meaningful increase. So we're comfortable and confident that we will be able to achieve those numbers based upon the conditions that we're seeing now in the economy and in our marketplaces. And Hilary, maybe you can sort of describe what's going on at 360?

Sure. So at the moment, we have 6 floors leased, and in discussions with proposals out, we have covered every other floor except 1. So to the extent that we were able to secure all of the tenants that we're currently in negotiations with, we would have 1 floor available at 360 Park Avenue South. So the tour activity has increased really dramatically. And as Doug noted earlier, the clients that are coming to see the building and asking us for these lease proposals are not just tech and media, but also more traditional asset managers and financial services firms that are just looking for great space and due to the tightness in the market are seeking out Midtown South, perhaps from Midtown or seeking to upgrade their space from existing locations in Midtown South.

One quick note for Boston in terms of the speed of delivery of recent leases, there is a portion, and Doug and Mike could probably respond to this afterwards, but a portion of the activity that Doug mentioned in the Urban Edge is in existing products, and they are spaces that don't need as much build-out. So we would anticipate at least 150,000, 200,000 square feet that could be delivered in that zone next year.

And I show our next question in the queue comes from the line of Seth Bergey from Citi.

I think kind of at the Investor Day, you had outlined $0.09 to $0.04 of kind of dilution from asset sales. It sounds like pricing and the debt market is coming a little bit and ahead of your expectations. How should we think about kind of that impact? And I think you also mentioned potentially bringing some more assets to market. So just kind of what are the puts and takes there?

I think -- as I mentioned in my notes, I think this one is harder to judge because it's based upon the timing. So we estimated timing for the transactions that we have under our asset plan at our Investor Day. And now we have started to execute on that timing, right? So we now have more assets under contract than we had at that time. And we have more assets in the market than we had at that time. And we do feel like we're getting pretty good demand from people, pretty good response from people on this. So I think we're going to be successful in that. And so the timing of when these things sell will impact the range that we provided. And if it was significantly earlier than that, could it be slightly more diluted? Yes, it could be slightly more dilutive. But it's hard to provide a better answer than that at this moment in time. I think as we go through the next quarter or 2, we will have more and more information, and we'll provide it to you.

And I show our next question comes from the line of Alexander Goldfarb from Piper Sandler.

Just a question on -- as you guys have tightened up the strategy since the Investor Day, just want to understand better on the investment side, how much of that -- when you guys think about the investment pool or more likely when the regional people come to you to submit proposals, how much the criteria have tightened up, meaning have yields been raised that, hey, all deals now need to be 100 basis points higher or some degree higher? Just trying to understand how it's gotten -- how you guys have tightened up again, just thinking about some of the legacy deals like a Platform 16, et cetera, [ that obviously I don't ] want to repeat, but you have the 343. So just trying to understand how the investment criteria has tightened up and how many deals got kicked out of discussion because of the new higher thresholds.

We've talked about this on prior calls. Our threshold deal that we're looking at for developments as we've repeated over and over again, has been about 8% or higher. And really before interest rates went up and of course, some of the diminution in demand that we saw from COVID, we were developing, depending on the market and the asset between 6% and 7%. So the yield requirement for office development has gone up 100 to 200 basis points. You combine that with the elevation in construction costs, it takes significantly higher rents to support development. And as we said on Investor Day, what does that mean? That means we're going to be a more selective office developer. But we are developing. We've launched $2.5 billion, a little bit under that, $1 billion of new development projects in office just in the last 6 months. So that's the increase that you saw. And then as I just said in my remarks, we are looking at acquisitions. There hasn't really been much to look at up until the last 3 to 6 months. There's a little bit more today. And the issue has been, we feel like we can get higher yields developing, albeit -- and we'll have a new building and it will have lower CapEx and longer WAULT and all those things, but it takes several years to deliver the development, that's the trade-off. So again, we're going to continue to look at acquisitions. And as I said in my remarks, we're going to continue to be disciplined, and I think cap rates are probably 150 to 200 basis points right now in the market below our development yield threshold.

Yes. And I just add one thing just to sort of give you a reference point. The development at 343 is, call it, $2 billion development. The development at 725, 12th Street is a $300 million development. Knock on wood, Jake and Pete are working really hard at lining up a client who desperately needs a new building with a potential purchase of a piece of ground or an existing building to build another building. Let's assume that's another, call it, $300-plus million. So we're talking about having $2.6 billion of developments that the company is going to be executing on. That's a pretty significant amount of external growth. And so I would say that the appetite for buying a building at a 6% NOI yield where the cash flow yield is probably 150 basis points lower than that, and there is rollover in 3 to 4 years, it's just not as enticing as those other opportunities are today. And so that's, I'd say, the frame of reference that we're sort of looking at as we think about "acquiring" new assets. Now if a fabulous building at an 8% cash return came up "off-market" and we thought it had great upside, of course, we would be really thinking about doing something like that. But these broker-initiated investments for "core assets" and CBD locations are -- they're interesting, and we're going to study them, but it's going to be hard for us to rationalize utilizing our dry powder for that.

And I show our next question comes from the line of Michael Goldsmith from UBS.

In the press release, you called out 89% of BXP's rents come from the CBD portfolio. Given the outlined dispositions are focused in the suburban markets, what percentage does that take CBD in the near term? And then long term, is the goal to just to be 100% or completely CBD?

I can't give you an exact percentage. I would agree that we want it to grow. There are certain suburban markets that I think we will maintain exposure to where we feel like we have a good sense of place where we can build an amenity-filled environment and where we think that it's got a mature and dense demand profile. So there are suburban markets that I believe we will stay in. I do believe though it's not going to go to 100%, but it's definitely going to grow because our -- both our asset sales focus, which is suburban, but also our new investment focus is more urban. So we're going to be adding assets that are CBD and detracting assets that are suburban.

And I show our next question comes from the line of Jana Galan from Bank of America Securities.

Congrats on the progress you've already made on the priorities laid out at the Investor Day. On the dispositions, can you talk to the pricing you're seeing on land, residential and office relative to kind of initial expectations?

I'd say that we're achieving pricing that is in line, if not a little bit better than our expectations. I mean it's very hard to say pricing for land because it depends on what the new user is doing. I think the real opportunity that we've had with land is that we have -- our regional teams have done a great job very successfully re-entitling many of these land parcels that were previously set up for office into residential. And as we all know, there's a housing shortage in this nation and many communities that were against housing in the past are for it today and that has allowed us to create a lot of value. The 17 Hartwell investment that I described last quarter is a great example of that. So it's a little bit hard to talk about "pricing for land." I think on the residential assets, we are seeing cap rates below 5%, which we think is very attractive. And on the office, it all depends on the location and the quality.

And I show our next question comes from the line of Floris Van Dijkum from Ladenburg Thalmann.

Clearly, it looks like your office markets -- your core office markets are inflecting. Office underlying growth was positive. It was down though in the hotel and residential. I think -- maybe remind us, there was a big occupancy decline apparently in D.C. in the residential side. Could you maybe talk about that?

I'm going to -- Mike is going to quickly look through the supplemental. The only thing I can imagine is that we brought 100% of Signature is in service, and then we brought Skymark into service. And Skymark is probably not 98% leased yet, although my guess is that we're going to be stabilized, which I think is, call it, in the 93% to 94% this quarter, which is extraordinary given the amount of units that we had delivered there. So I'm guessing that's sort of what happened. But I wouldn't -- I would not take that as anything other than a change in portfolio composition, not activity in our actual assets.

Yes, that's what it is, because this is a year-over-year concept. It's not a sequential concept. So in September of '24, the Skymark building was under development, right? And now it's leasing up, and it's actually leasing up quite well. It's, I think, around 90%, and it's leased up better than we expected. The occupancy in the stabilized portfolio that has been in service for a while has been very strong and stable and rents have continued to go up. Again, our residential portfolio is located in pretty tight markets. And so places like the urban Boston market and Reston, we've seen good fundamentals with our residential.

And it's going to get smaller in 2026 before it gets bigger again.

And I show next question comes from the line of Ronald Kamdem from Morgan Stanley.

Just on same-store NOI. I think you talked about sort of the occupancy inflection point, obviously improving '26, '27. Just can you tie that back to what the expectations are as you think about same-store NOI? Should we expect sort of similar 100, 200 basis point sort of acceleration? And what are the puts and takes there?

So we're not going to provide guidance for 2026 or 2027 today. I think that most of our growth is going to come from occupancy, and we've talked about that. I think the mark-to-market in the portfolio is improving because we're seeing rents go up in many of our marketplaces. So I think that situation will -- is improving and will continue to improve. And I think we will see positive same-store NOI growth as the occupancy climb. So yes, we will -- it will follow. It makes sense to follow and should.

And I show our next question comes from the line of Upal Rana from KeyBanc Capital Markets.

Could you provide some color on the current state of what you're seeing in terms of demand for life science leasing and supply across your markets, given some softer commentary from another one of your peers. You mentioned a few things related to Boston and Urban Edge, but maybe you can broaden that out a little bit and maybe what your outlook is for that industry?

So our life science exposure at BXP is comprised of 2 places. It's the Urban Edge of Boston, which I described. And again, we have 180,000 square feet of first-generation space available. And then it's our joint venture with another public RIET ARE in South San Francisco, where we have a large building that was developed a few years ago that is available for lease where, again, I think I described the demand for wet lab space being pretty tepid. Not much has changed on a relative basis there. We are seeing "some inquiry," but we're not, what I would describe as, close to any major transactions at that building at this time.

And I show our next question comes from the line of Dylan Burzinski from Green Street.

Owen, I think you mentioned seeking or going out to market and seeking a capital partner for 343 Madison sometime in 2026. But I guess just given the tight availability that you're seeing in New York, especially in the submarket, the 343 Madison is in and likely continued net effective rent growth. Why not sort of put the brakes on reaching out and getting the capital partner given that sort of backdrop?

Yes, it's a good question. I think as I tried to describe in my remarks, we're just being patient. We've had some inbound inquiry. We know of some investors that are interested in the project. We're having preliminary conversations. As I mentioned in my remarks, we're not in a hurry. This asset is appreciating. We're having leasing success. Markets are improving, as you suggested. And I think this will happen sometime in 2026. We do want to match to some degree, a commitment of capital to raising the capital. And so far, the development draws and spend on the project have been reasonably modest, but they do start to accelerate next year. So I do think 2026 will be an appropriate time.

And Dylan, just remember, as Owen said at the outset, we have 3 objectives, right? Our objectives that we outlined at our Investor Day were we want to grow our earnings and that's mostly through occupancy and deliveries of developments that are currently underway, we want to fund 343 Madison and we want to reduce our leverage. And so I think that our objectives in finding a partner sort of meet all of those requirements.

And I show our last question in the queue comes from the line of Blaine Heck from Wells Fargo.

Owen or Doug, I was hoping to get your latest thoughts on the New York mayoral race and any sort of impact you've seen, any commentary you've heard from tenants and just your general thoughts on whether it could or will have a notable impact on the New York office market.

I would suggest that the significant negative rhetoric that's in the press and the media about the impact of the administration of Mayor Mamdani, I think it's just overblown. I'm not suggesting that there are impacts that we need to be conscious of and aware of. As we've described before, there are controls and guardrails that exist for the mayor in New York. The state has a lot of approval powers over things like public transit and increasing taxes. And the state has indicated so far, there's not a lot of appetite for increasing taxes in New York. So that's something that we are concerned about. And again, our success as a company in any city is capped at the city's success. And so we want to do what we can to work cooperatively with the city and ensure that there are -- that it's a constructive environment for business, there is safety and security for the citizens. And those are the kinds of things that we're very focused on. The potential Mayor Mamdani has indicated that he wants to hire Jessica Tisch, who's the current head of the New York City Police Department. I don't know that she's agreed to do that yet, but we all think that's a great step because I think she received high accolades for her performance and success to date. So again, something that we're monitoring. But we are, I think, a little bit more constructive than what the media has been outlining on this change.

And I do show we have one question in the queue from Brendan Lynch from Barclays.

I'm just interested in your view on the new office tower above South Station in Boston and how that might impact leasing dynamics in the market?

So I'll give you a couple of comments, and I'll let Bryan give you his perspective. So the building that is currently open and has been available for the last number of months is a gleaming tower, and it's, I'm sure, going to be successful from an occupancy perspective at some point. There is a conversation, as I understand it going on with a large financial institution to relocate there, not necessarily grow, but relocate there. The building hit the market at the absolute wrong time, and there's a bunch of availability in the financial district that it had to compete with. And so the economics of the investment are different than what I would tell you, the success will be from an occupancy perspective because of just the nature of what's going on. I think it's unlikely that another building in the financial district will be started for quite some time. So if the market is able to continue to sort of absorb space, I think the [ financial ] market downtown will continue to recover. We have an opportunity to build a building at 171 Dartmouth Street, which is in the Back Bay, and there are obviously significant opportunities from a tenancy perspective because we have very, very, very tight supply in the Back Bay. So I think there's a higher -- much higher probability of something going on there. We would obviously not start that building unless we had a major commitment from a lead anchor tenant, as Owen sort of described earlier in terms of -- and he said what our development yields were. So I think that's sort of what I'd say my general views are on that development. Bryan?

Yes. So I'd comment on what's the impact to BXP portfolio. And as Doug mentioned, as you look at the Back Bay as the submarket, there's very little transfer of tenants that leave this market, and it's highly desirable. We look at our competitive set of the buildings we compete against daily, and it's a 3% vacancy. So it's extremely tight, as Doug mentioned. And in fact, we're actively asking tenants if they'd like to give back space because we've got growth in those sectors that Doug mentioned earlier. And then when you look at the downtown market, our buildings are leased up and tucked away for quite a few years now with limited, limited space at 100 Federal and the same is true at Atlantic Wharf and also Hub on Causeway.

That concludes the Q&A session. At this time, I would like to turn the call back to Owen Thomas, Chairman and Chief Executive Officer, for closing remarks.

No further remarks from us. Thank you all for your interest and your time and your interest in BXP.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.