U.S. GDP is growing at 4.3%, over 1.6 million jobs were created in the first quarter.
Weekly jobless claims are in decline and unemployment has dropped to 6%, only 2.5 percentage points above pre-pandemic levels of February last year.
U.S. retail sales surged 9.8% in March and air travel, as measured by TSA checkpoints, is up 10 times over a year ago, but still only 50% of pre-pandemic level.
While new COVID-19 cases have remained sticky at around 60,000 per day since late February, all data, including three million daily vaccinations, 43% of Americans having received at least one shot and the J&J vaccine reinstatement suggest the trajectory for a highly vaccinated population and fewer new COVID infections remains positive.
In the first quarter, we completed 592,000 square feet of leasing, 84% of the leasing volume we achieved in the first quarter of last year and 46% of our longer-term first quarter average.
These leases had a weighted average term of 7.6 years.
Our leases that commenced this quarter demonstrated a 15% roll-up of net rent for second-generation space.
More broadly, tenant requirements in our target markets in March, based on data provided by VTS, were up 33% versus the prior month and 51% versus the prior year, though we're only down -- though are still down 40% from pre-pandemic levels.
Now moving to private equity market conditions, there were $15 billion of significant office assets sold in the first quarter, though volumes were down 37% from the first quarter of last year.
There were again several deals of note completed in our markets, including in San Francisco The Exchange on 16th located in the Mission Bay district sold for $1.1 billion or $1,440 per square foot, a record price per square foot in San Francisco and it represented a 4.9% cap rate.
This 750,000 square foot recently developed building is 100% leased to a tenant trying to sublease the entire building.
In Seattle, 300 Pine, the Macy's building sold for $600 million or $779 per square foot and a 4.4% cap rate.
The majority of this 770,000 square foot asset was recently converted to office space, which is 100% leased by Amazon, and the remainder is undergoing further renovation.
And in the Washington, D.C. CBD, a 49% interest in Midtown Center was sold to an offshore buyer.
The building comprises 870,000 square feet and is substantially leased to Fannie Mae as its headquarters.
The gross sale price was $980 million, $1,129 a square foot and a 4.7% cap rate.
We recently received one million square feet of new entitlements at Kendall Center in Cambridge, and our joint venture at Gateway Commons is in discussions with local authorities in San Francisco to increase entitlements by 1.5 million square feet.
180 CityPoint, a 330,000 square foot ground-up development and part of our larger CityPoint campus in Waltham with strong visibility from I-95.
Second, 880 Winter Street is a 224,000 square foot Class A office asset we acquired in 2019 for $270 a square foot, and we'll redevelop into a lab building.
And 751 Gateway, a 229,000 square foot ground-up lab development as part of our Gateway Commons joint venture in which we own a 49% interest.
A large portion of our active development pipeline is now lab and currently comprises 920,000 square feet and $560 million of projected investment for our share with projected cash yield at stabilization approximately 8%.
We delivered into service this quarter, 159 East 53rd Street with 195,000 square feet of office fully leased to NYU as well as the HU, which will open after Labor Day and serve as a unique culinary amenity for our three building, 53rd in Lexington Campus.
We remain on track to deliver our 100 Causeway development in Boston later this year, which is pre-leased to Verizon, and we have four additional and significant projects slated to deliver in 2022.
This pipeline is 86% pre-leased with aggregate projected cash yield stabilization projected to be approximately 7%.
To maintain our external growth, in addition to adding the three life science projects, we also are investing approximately $182 million into an observatory redevelopment project on the top of the Prudential Tower in Boston.
When complete, the observatory will have three levels, comprise 59,000 square feet and will be a world-class attraction, featuring both indoor and outdoor, 360-degree viewing decks as well as exhibit an amenity spaces.
Net of all these movements, our active development pipeline currently stands at 10 development and redevelopment projects comprising 4.3 million aggregate square feet and $2.7 billion in total investment for our share.
We expect these projects, along with the lease-up of two residential buildings delivered in 2020 as well as 159 East 53rd Street to contribute 3.5% of annual and external growth to our NOI over the next three years.
The partners, including BXP, will commit up to $1 billion and we'll have the opportunity to invest 1/3 of the equity in each identified deal at their discretion.
We believe this venture with approximately $2 billion of investment capacity provides us the financial resources and return enhancements to be an even more nimble and competitive participant in the acquisitions market.
We recently completed the sale of our 50% interest in Annapolis Junction, Buildings six and 7, our last two remaining properties in the Fort Meade, Maryland market.
The buildings totaled approximately 247,000 square feet and sold for a gross price of $66 million, which is $267 a square foot.
We have under contract three buildings in our VA 95 Business Park in Springfield, Virginia for a gross sale price of $70 million.
And we also have under letter of intent, the sale of several stabilized suburban buildings for another approximately $190 million.
Additional asset sales are being evaluated, and we believe our gross disposition volume in 2021 will exceed $500 million.
Leasing volumes and requirements are rising, office collections exceed 99%.
Our $30 million per quarter of lost variable revenue is poised to return with offices reopening.
Although just yesterday, as an example, we had our meeting for our California parking, and we had 67 requests for additional monthly spaces, 42 of them which are hard.
And to give you a perspective, we actually lost more than half of our monthly parking over 800 monthly spaces in Embarcadero Center.
In Boston, we had a 50,000 square foot tenant, two floors in our CBD portfolio list their entire space.
And yesterday, JLL came out with a report saying there was about 1.5 million square feet of New York City sublet space that was brought -- pulled from the market by those subtenants.
So the average gross rent on our expiring office space portfolio in 2021, 2022 and 2023, so the next almost three years, totals about 5.8 million square feet and the average expiring rent is about $65.50 per square foot.
So if you believe that pre-pandemic market rents on that space were $70 a square foot, and I'm just using that as an example but it's close, and you wanted to measure the impact of some kind of a decline.
And this is an example, not a statement of where I think -- what we think is going on with rent, so let's use 10% as an example, then you would get to about a 4% roll down in rent or $2.50 a square foot or approximately $4.8 million per year over three years.
And as a point of reference, the change in second-generation gross lease rents this quarter was positive 9.5%.
Our in-service portfolio occupancy includes a 100% of our JVs, ended the quarter 140 basis points down or 640,000 square feet.
Now 50% of that space that was added to our vacancy this quarter provided no revenue over the last 12 months.
That's a 66,000 square foot lease at the hub on Causeway joint venture.
Also this quarter, we took back 62,000 square feet in a recapture, so we could expand a growing tenant that we are negotiating a lease extension on and expansion at Colorado Center.
We did have one disappointment, which was the 200,000 square foot departure at the Santa Monica Business Park.
We, however, today, as I sit here talking to you, have 640,000 square feet of signed leases that have yet to commence, and they are not included in our occupied in-service portfolio.
So let's start in Boston, which, by the way, represents over 1/3 of the company's total revenue.
So during the first quarter in the Boston CBD, we did five leases totaling 37,000 square feet.
And in every case, the starting rent represented a gross rent roll-up of between 12% and 25%.
We continue to have additional activity in the CBD portfolio, albeit it's with a preponderance of smaller tenants since we don't have much in the way of blocks available, and we are working on eight leases totaling over 60,000 square feet.
Of the 13 leases we have done this quarter or in the works, none of those customers are contracting and five are expanding and more than doubling their footprint.
In the suburban portfolio, we completed 124,000 square foot of new leasing.
The cash rent on those leases was up by 50%.
In Waltham, we're negotiating six more transactions totaling over 60,000 square feet.
But we will be gaining occupancy with new tenants coming into the BXP portfolio, like our new tenants at 20 CityPoint and 195 West Street in Waltham.
We announced our plans to reposition 880 Winter Street in early March and have had significant tour activity and have begun making proposals.
This 220,000 square-foot building will be available for tenant build-out in the second quarter of '22.
We completed three leases during the quarter totaling just 38,000 square feet, including a full floor expansion by a tenant at 399 Park.
In total, the growth rents on this space was about 5% higher than the in-place rents.
Now I said, New York City is our second most active region, and we're negotiating 14 office leases totaling over 170,000 square feet, including a full floor lease at Dock 72 in Brooklyn.
We also have two other active proposals at Dock 72, each in excess of 100,000 square feet.
five of the 14 active deals represent tenants that are negotiating expansions.
We're negotiating leases for food outlets at our 53rd Street, are eagerly anticipating the opening of the HU Culinary Collective at 601 Lex later this year, and we have a new lease negotiation for our vacancy on The Street at -- in Times Square Tower.
In Princeton, during the quarter, we completed four transactions and we executed a fifth at the beginning of April for a total of 28,000 square feet, and we're negotiating leases for another 29,000 square feet, all new tenants.
Activity in the D.C. region was light during the quarter with only 50,000 square feet of office leasing.
But as the calendar moved to April, we signed another 170,000 square feet.
210,000 square feet of this total leasing was completed on currently vacant space and included two large leases at Met Square in the district and an expanding tenant in Reston Town Center.
We have another 68,000 square feet of leases in process in the D.C. region, including 25,000 square feet in Reston from another expanding tenant.
In the Town Center, rents are basically flat to slightly down 1% to 2% since the relet rents have been adjusted by the fact that the current rents have been increasing contractually by 2.5% to 3% for the last five to 10 years.
We're negotiating leases with new food outlets totaling 27,000 square feet.
The markup on these three deals totaling 125,000 square feet was 46%.
Tour activity for small tenants, a floor or under, has picked up and grown about 40% sequentially month-to-month from January to April.
But large tenants have started to begin to look for space.
We see the activity and the proposals on the available sublet space we have at 680 Folsom.
In South San Francisco, we signed a lease of 61,000 square feet at 601 Gateway.
That's going to absorb about 50% of the expiration that's going to occur in the second quarter.
We are under way at 751 Gateway, our first lab facility development in South San Francisco and have begun responding to proposals for this early 2023 delivery.
651 Gateway will be taken out of service in the second quarter of '22 when the final tenant vacates, and we will commence a lab conversion of that 293,000 square foot building.
We're in renewal discussions with 24,000 square foot tenant and has commenced lease negotiation with a second tenant for 30,000 square feet on market-ready vacant space, and we have a tenant ready to go on a remaining floor of 18,000 square feet at 2440 El Camino.
There are some large tech tenants in the market down in the valley today looking for expansion space, and we are certainly chasing those tenants if the timing were to match for our potential delivery at Platform 16.
In spite of the challenging COVID conditions in California and Santa Monica, we continue our renewal negotiations with a 260,000 square foot tenant at Colorado Center.
And as I said at the outset, we've recaptured about 60,000 square feet that's going to roll into that tenant's expansion.
We've also signed a lease for 72,000 square feet at Colorado Center with Roku, who's new to the portfolio.
As we guided last quarter, we redeemed the $850 million of our expiring unsecured bonds that had a 4% and 8% coupon using available cash.
But in addition to that and not part of our prior guidance, we issued another $850 million of new 11-year unsecured green bonds at an attractive coupon of 2.55%.
The proceeds were used to repay our $500 million unsecured term loan that was due to expire next year and we redeemed at par an expensive $200 million, 5.25% preferred equity security.
We incurred noncash charges during the quarter of approximately $7 million or $0.04 per share related to writing off unamortized financing costs.
Our next bond expiration is not until early 2023, when we have $1 billion expiring at an above-market interest rate of 3.95%.
In advance of that in early '22, we have a $626 million mortgage expiring on 601 Lexington Avenue in New York City.
This loan also carries an above-market interest rate of 4.75%.
For the first quarter, we reported FFO of $1.56 per share, that was $0.01 above the midpoint of our guidance range.
The variances to our guidance were comprised of $0.04 per share of higher NOI from the portfolio and $0.01 per share of higher fee income, partially offset by the $0.04 per share noncash charge related to our refinancing activity.
The portfolio NOI outperformance included $0.02 per share of lower operating expenses during the quarter, much of which will be incurred later in the year.
These collections drove a significant portion of our $0.02 revenue beat.
At the midpoint, this is $0.04 per share better sequentially from the first quarter.
And as Doug explained, our occupancy declined by 140 basis points this quarter, which was expected, but results in a sequential drop in portfolio NOI from the half that was paying rent before.
Doug described 640,000 square feet of signed leases that have yet to commence occupancy.
460,000 square feet of this will take occupancy later this year, representing over 100 basis points of occupancy pickup.
First, our financing activities during the first quarter have a net impact of increasing interest expense by $5 million for the year.
Second, we have a loss of rental revenue from taking 880 Winter Street out of service for redevelopment into a life science facility.
This has a negative impact of about $2 million.
And lastly, the additional $260 million of dispositions that Owen described are expected to result in a loss of about $7 million of NOI.
In aggregate, these items are expected to reduce FFO for the rest of 2021 by approximately $14 million or $0.08 per share.
We anticipate delivering 100 Causeway Street in Boston and 200 West Street in Waltham late in 2021, representing $315 million of investment at our share that is collectively 95% leased.
This includes our building for Google in Cambridge; Reston Next for Fannie Mae in Volkswagen; the Marriott Headquarters in 2100 Pennsylvania Avenue.
This represents delivery of $1.7 billion of investment in 2022 at our share and 2.7 million square feet that is currently 85% pre-leased.
This $2 billion of investment in conjunction with the recovery of our ancillary income sources and improved leasing activity post-pandemic sets us up for occupancy improvement in a period of solid future earnings growth.
This will be Peter Johnston's last earnings call as he's retiring from Boston Properties next month after 33 years of service.

Summary:
But large tenants have started to begin to look for space.
For the first quarter, we reported FFO of $1.56 per share, that was $0.01 above the midpoint of our guidance range.