Boston Properties CEO Says Tenants Driving Demand for Mixed-Use Development

Owen Thomas

Owen Thomas, CEO of Boston Properties (NYSE: BXP), joined Nareit for a video interview at REITworld 2017.

Boston Properties owns and develops class-A office properties, with a significant presence in Boston, Los Angeles, New York, San Francisco and Washington, D.C.

Thomas commented on the growing popularity of mixed-use developments.

“We are increasingly seeing demand for properties that have all different kinds of uses…tenant demand is driving mixed-use,” Thomas said.

Despite its involvement with mixed-use development, Thomas stressed that Boston Properties remains primarily an office company. Retail and apartment properties make up less than 10 percent of its portfolio combined, according to Thomas.

Meanwhile, Thomas highlighted the company’s goal to grow net operating income (NOI) 25 percent by 2020. About two-thirds of that growth is expected to come from the delivery of several new developments—including the Salesforce Tower in San Francisco. The developments are about 75 percent leased at present.

One-third of the projected NOI growth is forecast to come from increasing the combined occupancy level of nine assets from 90 percent to 93 percent. Boston Properties is about half-way toward that goal, Thomas said.

Thomas also observed that the office market overall appears to be in equilibrium.

Most of the demand that Boston Properties has observed has occurred in tech-oriented markets, Thomas said. At the same time, “there is a lot of supply and new development discipline,” Thomas noted.