Boston Properties, Inc. BXP signed a 140,000 square foot extension lease at the Santa Monica Business Park in Santa Monica, California. The tenant is a technology company. The lease reflects strong demand for this campus and the opportunity for the West Los Angeles submarket.
Located in the heart of the Sunset and Ocean Park neighborhoods, the 1.2 million square foot Santa Monica Business Park is a creative office campus. It’s one of West Los Angeles’ most coveted workplaces, with top tech and entertainment companies in its tenant list. This likely prompted the tech company to go for an extension lease.
In fact, according to management, “This lease underscores the attractiveness of the West Los Angeles and Santa Monica Business Park submarket, in particular, in attracting and retaining today’s creative talent. . “
The final lease will increase the occupancy level of the Company’s property and fuel growth in income from rental income.
Despite a lackluster office market scenario, the REIT has recently seen an increase in rental activity and signed long-term leases with media, technology and consulting companies. In early May, the company announced that it had signed a long-term lease for 98,000 square feet of space in Metropolitan Square in Washington, DC. The tenant, Boston Consulting Group, leased the space for 12 years.
In addition, the company has signed approximately 592,000 square feet of leases, with a weighted average lease term of 7.6 years in the first quarter of 2021. This notably represents a rental volume of 84% of the total square feet of the leases entered into. during the previous one-year period.
In addition, as of March 31, 2021, Boston Properties’ portfolio included 196 properties, covering 51.6 million square feet of space. This included nine properties under construction / redevelopment.
With the economy continuing to reopen and vaccine distribution at a faster pace, there has been a slight increase in office jobs from pandemic lows. Of these, Boston Properties’ portfolio of modern Class A office buildings is well positioned to benefit from the flight-to-quality preference of office tenants. Nevertheless, the flexible working environment is a source of concern.
Shares of this company Zacks Rank # 4 (Sell) have gained 27.1% so far this year, outperforming the industry rally by 16.9%.
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To note: Everything about earnings presented in this valuation represents funds from operations (FFO) – a measure widely used to assess the performance of REITs..
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