Boston Properties Bets On The Office Flight To Quality

Propmodo Daily

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Boston Properties' expansion at Reston Town Center highlights the office market divide, as they focus on high-end spaces and hope to gain an advantage despite rising costs and reduced demand. Plus, as hurricane and wildfire seasons intensify, new radar imaging technology offers real-time data to improve emergency response and insurance practices.

Now let’s dig in…

Boston Properties Bets on the Office Flight to Quality

The office market has become a story of the haves and the have-nots. There’s no more evident example of this than Boston Properties’ recently submitted proposal to double down at the Reston Town Center campus in Reston, Virginia.

Boston Properties executives have said in recent years that rising costs and diminished office demand have made it virtually impossible to rationalize building new offices. The company is making exceptions for some projects. Boston Properties plans to redevelop about a dozen acres for the second phase of the Reston Tower Center. The plan involves increasing the office component of the campus from about 645,000 square feet to 930,000 square feet.

If the plan is approved, Boston Properties will refurbish two 1980s-era buildings and a parking lot and replace them with five new buildings designed to add about 2.1 million square feet to the Reston campus’s nearly 18 million square feet of space. The campus already has some high-end tenants.

Fannie Mae leases the roughly 644,000-square-foot office tower at 2000 Opportunity Way, and Raymond James, Palo Alto Networks, and others occupy space next door at 1950 Opportunity Way. Other large corporate hubs on the campus include those for Yahoo and Microsoft. Altogether, the Reston Town Center’s office space is roughly 96 percent leased as of March 31.

While building more office space may seem suspect in today’s market, Boston Properties’ focus on premier space puts it at a distinct advantage. CoStar data reveals the average vacancy rate for top-tier office properties was less than 15 percent by the end of the first quarter of this year. That’s well below the more than 19 percent vacancy rate reported for non-prime office properties with fewer amenities or in less desirable areas.

A lack of new office construction may also benefit Boston Properties. CBRE reports that if annual net absorption stays at about 12 million square feet for top-tier office buildings, a slowdown in construction will help drive the vacancy rate for high-end offices to more than eight percent by 2027.

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Propmodo Technology

As hurricane and wildfire seasons intensify, the insurance industry faces rising natural disaster risks, leading some companies to leave high-risk areas. New radar imaging technology offers real-time data on disasters, improving emergency response and future risk models. This advancement promises better disaster preparedness, recovery, and informed insurance practices.

Check out this week’s Propmodo Technology focus on Insurance and Risk Management with the support of our friends at Partner Engineering and Science, Inc.

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Join us on Tuesday, July 30th, for a Propmodo Live webinar where we will explore the latest office occupancy trends reshaping workplace performance and utilization. We'll delve into shifting demand patterns, highlight success stories from various sectors, and discuss the effects of hybrid work models on occupancy and operational strategies.

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