Boston Properties is making a $2 billion bet on the office market.
Executives at the real estate investment trust announced during its first quarter earnings call that it will team up with two sovereign wealth funds to invest in office real estate.
The investors, which the REIT said it would identify once the joint venture paperwork was finalized, will put in about $1 billion worth of equity, which will work out to about $2 billion in purchasing power.
“It will be investment-by-investment,” said CEO Owen Thomas, “and if it goes well, it could be bigger.”
Boston Properties also announced on the call that it launched three new life sciences labs in Boston and South Francisco totaling almost $1 billion in investment.
The life sciences and biotech sectors are closely watched by the investment and brokerage communities, which see them as a source of demand for space with a long runway for growth. The top 14 markets across the country are expected to add 36 million square feet of lab space.
In New York City, projects by Taconic Partners and Silverstein Properties, Alexandria Real Estate Equities and Georgetown Properties have experienced recent success.
On Park Avenue South, Enterprise Asset Management is looking to sell its interest in a 450,000-square-foot property that could be converted to a life sciences hub across the street from medical fund manager Deerfield’s hub at 345 Park Avenue South.
But Boston Properties executives said their largest markets are in the areas surrounding Boston and San Francisco, and that there wasn’t even a close third.
The REIT reported net income of $91.6 million for the first three months of 2021, down from $497.5 million during the same period last year.
Boston Properties executives said they’re seeing a strong increase in tenants touring spaces, but they’re not yet signing large leases in the same numbers as before the pandemic.
Correction: A previous version of this article said Boston Properties’ new joint venture would be focused on life sciences. The JV is focused on all office developments, not just life sciences.