BXP, Inc. BXP is slated to report third-quarter 2024 results on Oct. 29, after market close. Its quarterly results are likely to reflect a year-over-year decrease in revenues and funds from operations (FFO) per share.

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In the last reported quarter, this office real-estate investment trust (REIT) outpaced the Zacks Consensus Estimate of $1.77 in terms of FFO per share. The quarterly results reflected better-than-anticipated revenues on healthy leasing activity. However, higher interest expenses during the quarter acted as a dampener.

Over the preceding four quarters, BXP’s FFO per share surpassed the Zacks Consensus Estimate on three occasions and met on one occasion, the average beat being 1.00%. This is depicted in the graph below:

 

BXP, Inc. Price and EPS Surprise

BXP, Inc. price-eps-surprise | BXP, Inc. Quote

 

U.S. Office Market in Q3

Per a Cushman & Wakefield CWK report, although the overall net absorption was negative in the third quarter, certain markets registered improved absorption. U.S. office vacancy rate grew in the quarter, marking the 10th straight quarter of increasing vacancy.

Overall net absorption of negative 18.5 million square feet (msf) for the third quarter further declined from the negative 13.9 msf recorded in the previous quarter. The nation reported a cumulative total of negative 293.7 msf since the beginning of the pandemic.

The Cushman & Wakefield report highlights that despite the weaker trends at the national level, demand for U.S. office spaces outperformed in some markets.

More than half of the U.S. office markets reported improved absorption figures in the third quarter compared to the prior year quarter, and a similar number of markets experienced quarter-over-quarter absorption growth. In the third quarter of 2024, 27 markets recorded positive absorption.

In addition, occupiers’ growing preference for high-quality office buildings has played a key role in leading to positive net absorption rates in these markets. Further, the occupancy of these assets in six gateway markets was approximately 800 basis points (bps) higher than the overall office average.

Nonetheless, the third-quarter national vacancy rate reached a record high of 20.9%, increasing 55 bps sequentially and 190 bps year over year. The national asking rent increased to $38.15 in the third quarter from $37.68 in the previous quarter.

BXP’s Projections

BXP owns a portfolio of class-A office buildings concentrated in a few select high-rent, high-barrier-to-entry geographic markets of Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. Given the rise in demand for top-tier assets, the company’s properties are likely to have witnessed healthy leasing activity in the third quarter.