To emphasize his point, Linde cited Boston Properties' strategy of operating "at the top end of the real estate markets in select areas with barriers to supply," commenting that the location and the leasing composition of a portfolio really matters in times like these. For Boston Properties, he says it means that "while we do very well in good times, on a relative basis, we do even better in more challenging times." The Boston Properties' president outlined the REIT's performance in a market-by-market summary.

Office demand in Boston remains pretty strong, Linde said. "We continue to respond to requests for proposals for large tenants. In fact, there are over 15 that are greater than 70,000 sf that are active today in the market at our proposed developments in Waltham and Weston," he said. In addition, he pointed out that in Cambridge, Google and EMC and VMware and Akamai and Microsoft have all expanded during the last few quarters, leaving a vacancy rate there of just under 8% in Kendall Square. He added that the Boston CBD has been shielded from the job losses stemming from the continued credit crisis because the financial firms in Boston were already consolidated in a trend that has taken place over the past 10 years.

By contrast in New York City, reductions in force by major financial firms have put significant blocks of space on the market. "One of our brokers has tracked about 20,000 job losses corresponding to about 1.4 million sf of sublet space from those financial services firms and we are certainly not immune to that," Linde said. For example, Citibank is offering 250,000 sf in Citigroup Center. Boston Properties is in discussions with a law firm to relocate and expand into all of the available Citibank space when they can make it available, which will probably not be until 2009, he said.

In the Washington, DC market, the Boston Properties holdings are 98% leased. "Our only significant exposure in 2009 is at 1301 New York Avenue, where we are in renewal discussions with the Department of Justice," Linde said.

The REIT's primary leasing focus in the DC market is 2200 Pennsylvania Ave., a 440,000-sf development where construction began on the parking structure recently. Activity for leases that would commence in 2011 is very strong, Linde said, adding Boston Properties is in active negotiations with a number of tenants for triple net rents expected to be between $55 per sf and $65 per sf per year.

Activity inside the Beltway continues to be very strong and tenant demand has actually outstripped the REIT's availability at its Wisconsin Place, but that contrasts with conditions elsewhere. "Outside the Beltway at Tower Oaks, the story is a bit different," Linde said. The market is narrower there, with Boston Properties signing leases for about 42,000 sf of the 183,000-sf building, "The rest of the lease-up is going to be slow," Linde forewarned.

The Boston Properties president also referred to "pretty slow" activity in San Francisco, with no large users in the marketplace looking for new space. The nearby Silicon Valley continues to show job growth in the computer electronics and manufacturing sectors, where most new space requirements are in the range of 15,000 sf to 70,000 sf, he said.

Linde delivered his comments during a conference call in which Boston Properties reported funds from operations of $145 million for the quarter ending June 30. At 2007's second-quarter close, FFO was $142.9 million. The REIT reported it expects to consummate the previously announced acquisitions of the General Motors Building and three other Manhattan assets from Macklowe Properties for almost $3.95 billion.