Boston Properties (BXP) Occupancy Recovery Gains Momentum, Driven by AI Sector Expansion

BXP's occupancy is set to climb, boosted by AI sector growth. Despite undervaluation, investors should consider potential risks.

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2025 October 10 . 2:01 AM

1 min read

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Boston Properties (BXP) Occupancy Recovery Gains Momentum, Driven by AI Sector Expansion

Boston Properties (NYSE: BXP) is showing promising signs of recovery, with occupancy rates on the rise and a lean leasing pipeline. The company's fundamentals are strengthening, suggesting a turning point in its occupancy recovery.

BXP's occupancy is projected to climb from 86.4% in Q2 2025 to 89% by the end of 2026, and further to around 91% by the close of 2027. This improvement is supported by a modest 4.7 million square feet set to expire between mid-2025 and the end of 2027, allowing BXP to focus on leasing activity.

The company's leasing momentum is accelerating, with activity in H1 2025 up ~22.2% year-over-year. Approximately 1.0 million square feet has already been signed in Q3 2025, with another ~1.1 million square feet under negotiation. BXP's portfolio is concentrated in six key markets, with over 180 properties totaling more than 53 million square feet. Notably, 90% of its net operating income comes from premier assets in supply-constrained markets, with a new structural demand driver from AI-sector expansion.

Despite these positive developments, BXP is trading at a relatively low 21x NTM PE, indicating that the market may be undervaluing the company's improving fundamentals and growth potential. However, investors should be aware of risks such as a significant downturn in the macro environment, sector-specific weakness, and counterparty risk.

BXP's improving fundamentals, strong leasing momentum, and focus on occupancy growth suggest a bullish outlook. With a portfolio concentrated in key markets and a significant portion of its income derived from premier assets, BXP is well-positioned to benefit from the expanding AI sector. Despite its undervalued status, investors should carefully consider the potential risks before making investment decisions.