BXP, the largest nationwide owner of Class A office space, has secured a $1.2 billion construction loan to build its 930,000 square foot office skyscraper development at 343 Madison Avenue in Midtown. The Real Estate Investment Trust (REIT) announced this on Wednesday morning during its second-quarter earnings call.
Financing for BXP's 46-storey development was provided by Wells Fargo, Bank of America Securities, Bank of New York Mellon, and J.P. Morgan Chase. The loan has an initial term of four years, plus a one-year extension option, as BXP stated. The $2 billion project at 343 Madison Avenue is scheduled for completion in 2029 and will include offices, food and beverage areas, terraces, and numerous amenities.
High Pre-letting Rate and Rising Rents
The anticipated skyscraper, located west of Grand Central Terminal, is already 50 percent pre-let. This was achieved through the execution of a 275,000 square foot lease with insurance and investment giant C.V. Starr in October to anchor the property, as well as the lease of approximately 150,000 square feet by law firm McDermott Will & Schulte in April. C.V. Starr later expanded its initial lease by an additional two full floors.
BXP executives stated during the conference call that the company is in negotiations with two additional prospective tenants, which would increase the building's pre-letting rate to nearly 70 percent. CEO Owen Thomas indicated that the REIT would lease the remaining floors closer to delivery to secure “market-leading rents”. Hilary Spann, Executive Vice President of BXP's New York Region, added that landlord pricing power in Manhattan remains extremely favourable and is expanding geographically. She emphasised that for the highest quality buildings and specifically at 343 Madison, rents achieved were consistently 10 to 15 percent above those of the previous year. Even on the lower floors of buildings, where rents are somewhat more affordable, they still saw a 20 percent year-on-year increase, which is fundamentally attributable to a lack of available space in the market.
Strong Leasing and Revenue Growth in Q2
In the second quarter of 2026, BXP recorded leases totalling approximately 1.8 million square feet across 106 transactions, which represents around 129 percent of the company's ten-year average for the second quarter. This success was primarily driven by the McDermott lease at 343 Madison Avenue and a 322,000 square foot deal with Boston Dynamics for the Reservoir Place office building in Waltham, Massachusetts. The second quarter leasing performance also marked a significant increase from the 1.1 million square feet across 68 transactions reported in the first quarter of this year.
Furthermore, BXP reported Funds from Operations (FFO) of $283.4 million, or $1.78 per diluted share, for the second quarter, compared to $271.1 million, or $1.71 per share, in the same period last year. The REIT's total revenue increased by 3.1 percent in the second quarter to $895.7 million, compared to $868.5 million in the second quarter of 2025. This was also an increase from $872.1 million in the first quarter of this year. BXP's net income for the second quarter amounted to $68.6 million, a decrease from $89 million in the same period of 2025 and $101.6 million in the first quarter.
In its earnings release, BXP attributed the decrease in net income to the anticipated disposal of Sumner Square, a multi-building office and retail complex in Washington, D.C., whose sale is expected to yield $63 million. BXP currently has six assets under purchase agreements with total net proceeds of $240 million, including two office buildings in D.C. The Commercial Observer also reported this month that BXP is marketing its ground lease for 7 Times Square in Manhattan's Midtown for well over $700 million.
