Occupancy Trajectory
Q: How realistic is your occupancy outlook?
A: We are optimistic that we'll sign over 2 million square feet of leases commencing in 2024 and 2025, keeping occupancy at least flat. We're hopeful for opportunities that could improve occupancy further, though we aren't providing 2025 guidance yet.

Return-to-Office Trends
Q: Are return-to-office mandates effective on the West Coast?
A: There's a cultural difference between the West Coast and cities like New York, but we expect increased utilization over time. Companies like Salesforce have instituted policies to bring people back, and we're seeing more activity in our buildings. In San Francisco, we're at about 65% of pre-pandemic occupancy levels but expect gradual improvement.

Investment Opportunities
Q: How do you view your capital cost versus potential investments?
A: Our look-through cap rate is in the mid-6% range. Development yields in New York have increased materially above pre-pandemic levels of 6%, and acquisitions in premier workplaces are bidding at high 6% to 7% cap rates. We anticipate more transaction activity as financing availability improves.

Residential Development Plans
Q: What's your strategy for residential projects?
A: We're moving forward with several residential projects on land we control, converting some sites originally slated for office to residential. Our approach is to develop with minority equity interests, focusing on generating fees and profits rather than long-term holds.

Sublease Market
Q: What's the state of the sublease market across your regions?
A: The sublease issue is biggest on the West Coast, especially in San Francisco and Seattle. Beyond that, it drops off significantly; we have minimal sublease problems in New York City. In our portfolio, about 2 to 3 million square feet have been sublet but are not "on the sublease market."

External Growth in 2025
Q: Should we expect acquisitions in 2025?
A: Within our six markets, we're opportunistic and seek the best risk-return investments. Opportunities exist, but underwriting is challenging, especially in the West due to slower leasing. We anticipate rising transaction activity as conditions improve.

New York Market Outlook
Q: How is the New York market performing?
A: The occupancy decline was anticipated due to a tenant move-out, but our other leasing activity is above expectations. We're seeing significant interest and active dialogues for 2024 and 2025 in our Manhattan properties.

D.C. Market and Rent Levels
Q: Are tenants willing to pay rents needed for new development in D.C.?
A: Opportunities exist, driven by demand from the legal industry for high-quality space. Rents necessary for new developments are probably 15% to 20% higher than existing trophy properties.

Bain Renewal and Boston Development
Q: Why didn't Bain move to your new Boston development?
A: New building costs in Boston are about $1,400 to $1,600 per square foot, leading to rents materially higher than existing buildings. Current market conditions don't support starting that development, but we hope to in the future when conditions improve.

Tech Leasing Activity
Q: Is tech touring activity picking up more in New York than the West Coast?
A: In New York, tech demand began to improve after Labor Day, but decisions are taking longer. On the West Coast, beyond AI firms, there's broader tech interest, including from the autonomous vehicle industry.