BXP, the largest owner of Class A office properties in the United States, has beaten revenue expectations in the third quarter of 2026. The real estate investment trust generated revenue of 911.4 million US dollars in the three months to 30 September. This represents an increase of 4.6 per cent compared to 871.5 million US dollars in the prior-year period, as well as an increase over the 895.7 million US dollars reported in the second quarter.
Portfolio streamlining and disposals in Washington and New York
Two substantial sales contributed to this result, among other factors. In Washington, D.C., BXP completed the disposal of the Sumner Square and 1330 Connecticut Avenue office properties. The gross sale price of both properties totalled around 155.4 million US dollars, generating net proceeds of approximately 150.3 million US dollars for the REIT. In addition, the company is in negotiations regarding the sale of 7 Times Square, a Class A office tower in Midtown Manhattan with 1.2 million square feet of leasable space, for which BXP is targeting proceeds of between 700 and 750 million US dollars.
In October, BXP also sold a 10.6 per cent stake in the 343 Madison Avenue office scheme in Midtown Manhattan to AVRS Partners. The 46-storey development comprises approximately 930,000 square feet of space. BXP and AVRS Partners already hold joint stakes in the General Motors Building at 767 Fifth Avenue. This property currently has an occupancy rate of 99.9 per cent. However, this rate could fall if law firm Weil, Gotshal & Manges, which occupies roughly 400,000 square feet in the building, files for bankruptcy following the departure of its designated chairman in the summer.
During an earnings call, BXP President Douglas Linde highlighted the high occupancy level of the General Motors Building and referred to rental levels in Midtown. The average in-place rent at 767 Fifth Avenue is currently below 150 US dollars per square foot. There is a clear gap between these in-place rents and actual market levels, Linde explained.
Leasing momentum and earnings metrics
In the leasing market, BXP completed 74 transactions totalling approximately 1.2 million square feet in the third quarter. According to Chief Executive Owen Thomas, demand was primarily driven by companies in the artificial intelligence, financial, legal and corporate services sectors. For the coming months, management reported a pipeline of an additional 1.3 million square feet of leases under negotiation.
This also applies to the 343 Madison Avenue project. Thomas stated that BXP is in talks with a prospective occupier to lease five floors. Combined with existing commitments from investment firm C.V. Starr and law firm McDermott Will & Schulte, the pre-letting rate for the high-rise currently under construction would reach nearly 70 per cent. Funds from operations (FFO) stood at 1.89 US dollars per diluted share in the third quarter, compared to 1.74 US dollars in the same quarter of 2025, beating guidance by 8 cents. Net income was 114.5 million US dollars, down from 121.7 million US dollars in the previous year.
