Operator: Thank you. Our next question comes from the line of Camille Bonnel from Bank of America. Please go ahead.
Camille Bonnel: Good morning. On the 6 projects that are scheduled to be stabilized in 2025 and have started or are starting initial occupancy this year, how far along are the leasing prospects on those buildings? And how much do these development prospects represent in the active leases under negotiation pipeline?
Douglas Linde: So Mike is pulling out which ones theoretically are…
Michael LaBelle: 180, 103.
Douglas Linde: So the developments that we have, I believe that you’re referring to are 290 Binney Street, which is the 2026. That’s AstraZeneca, that’s 100% list [ph] 103 Fourth Avenue, which we don’t have any leasing velocity on. 180 CityPoint, where we have about 140,000 square feet of available space. Those 2 are coming online in ’24 in terms of when they’re going to be in service. And we need to find some clients to lease those buildings in order for them to be stabilized in 2025. At 651 Gateway, it’s a similar conversation, in that we’ve started doing leasing. We will be through 12 months of the lease-up in early 2025, and we need to do more leasing in order to get that one going in the 360 Park Avenue South, which — where the building construction is complete and Hilary and her team in New York are aggressively pursuing anybody who wants premier space in the Midtown South market, where we’ve done one lease, and we have another lease that we’re close to having a letter of intent on for a floor plus.
And then there’s other interest in the building. And that one also we need to do additional leasing in order for it to be stabilized in 2025. The rest of the — I believe the rest of the stuff is residential, and that’s obviously a question of when those buildings start and how long the ramp-up is in terms of turning over the units and I think when Skymark opens, which is the Reston property in the third quarter of 2024, we have probably a 15- to 18-month lease-up. I know you can correct me if I’m wrong, in or for that one to be stabilized.
Owen Thomas: No, those are both correct. And that also has, as you know, 75,000 square feet of office and then some ancillary retail. And we’re working on a couple of deals for the retail space. And we’ve got, I would say, a real prospect for about half of the office space that we’re speaking to, but not at LOI stage with at this point in time.
Michael LaBelle: So Camille, that was really in my notes, I kind of described that the deliveries in ’24 are these deliveries we’re talking about. And we don’t expect ’24 to have a really significant impact from those, but we do expect to have some leasing momentum in ’24, with income starting in ’25. So our expectation is that that’s when we will start to see more revenue come from these buildings.
Operator: And I show our next question comes from the line of Blaine Heck from Wells Fargo.
Blaine Heck: Great, thanks. So it seems like we’re still seeing the flight to quality trend play out with most net absorption and leasing activity taking place at high-quality buildings with high rents. But recent media reports have tried to kind of poke holes and even the top of the office market. So just wanted to get your thoughts on whether anything has changed with respect to leasing activity or rents at the top of the market and whether you’ve noticed that tenants have maybe become more cost conscious and less likely to lease at those highest quality spaces?
Owen Thomas: I would tell you — I didn’t go through it this quarter because we had so much other stuff to go through. But the premier workplace data that I generally provide on this call shows accelerating distancing between premier workplaces and the rest of the market from a vacancy, net absorption and rental perspective. So at least at a high level, the trend to premier workplace continues to run unabated.
Douglas Linde: And I would tell you that the most activity that we are having on a building-by-building basis is, in fact, in our CBD most premier assets. And in no case, are we seeing changes in the economics of what the market or we are asking for and ultimately achieving in those client conversations. I’m not sure where that information that was in the article in the Wall Street Journal came from, but it’s just — and I’ll let Hilary describe what’s going on in Manhattan in terms of our activity level, which I think is sort of the poster trial for Premier. And she can sort of give you a perspective on why I think that article is just not — it doesn’t hold water for us.
Hilary Spann: Thanks, Doug. Yes. So we have seen consistently since, at least 2019, gains in occupancy in Midtown Manhattan for Premier workplace, with corresponding declines in occupancy for non-Premier workplaces. And the same is true in terms of rental rate gains for Premier Workplaces in Midtown Manhattan. So while you might expect, given the weakness in some of the overall office statistics to sort of affect the Premier Workplace, in fact, the opposite is true. And at present, the vacancy rate for Premier Workplaces is hovering just around 10%, which we consider stabilization levels for Midtown Manhattan. And although the capital markets environments are not constructive for new development, that is generally the point in the market at which you would start to see people interested in building new products.
So if you think about the availability of high-quality space in Midtown, there are only 3 available spaces in the Park Avenue submarket of 250,000 square feet or greater. One of them has a lease out on it. So if you are a tenant of size and you’re looking for premier space in Midtown, it simply is very, very hard to find and getting harder. And that drives pricing, obviously. So we feel very, very good about our Midtown portfolio. And we think that rents will continue to improve across the board for Premier Workplace in New York.
Douglas Linde: And then just — Jake, you might comment on the phenomenon you’re seeing at the high end — in the premier buildings where, I guess, what we would refer to in Washington, D.C. as the trophy buildings in terms of both the demand and the economics there.
Jake Stroman: Sure. I will just sort of tack on to what Hilary had noted in Washington, D.C. We continue to see a significant sort of material outperformance for trophy class assets and repositioned assets in our market. There’s an incredible amount of leasing velocity that we see at those assets, relative to what we see across the rest of the market being commodity space. So we’ve achieved a lot of leasing success in a lot of our premier assets in downtown Washington and continue to see a lot of traffic.
Douglas Linde: We’re seeing the same thing in Boston. And as noted in our discussions internally this last week, for our Boston portfolio, we’re at 4.4% vacancy and Cambridge is 2.5, which is just phenomenal. We are seeing — I wouldn’t say that this is outstanding trend, but we are seeing users that normally would not be in our office building, where they want more square footage in, let’s say, a Class B or C building, looking to us for reaching up with smaller square footage just used more efficiently.
Operator: Thank you. And I show our next question comes from the line of Upal Rana from KeyBanc. Please go ahead.
Upal Rana: Hi, good morning. The D.C. market seems to be a bright spot, given the JV acquisition of 901 and the lease extension as well as the increase in occupancy there. Do you see the strength that is sustainable? Or could you provide your thoughts on the D.C. market in general? Thanks.
