How Are Office REITs Positioned in Q4 as Demand Gathers Steam?

Core Insights - Office REITs are at a turning point as macro conditions improve, with demand recovering in 2025 due to stronger office-using employment and a shift towards higher-quality spaces [1] - Upcoming earnings reports from several office REITs will provide insights into leasing velocity and rent growth, helping investors distinguish between market-wide trends and company-specific strategies [2] Market Fundamentals - Cushman & Wakefield's Q4 2025 report indicates positive national net absorption, particularly strong for Class A spaces, with overall vacancy stabilizing near 20.5%, a minimal increase of 30 basis points year-over-year [3] - Construction activity is low, with the pipeline down approximately 35% in 2025, leading to a tighter leasing environment as demand concentrates in gateway and Sun Belt markets [4] - Vacancy rates are nearing a peak as occupier demand accelerates, especially for quality assets, while sublease inventories continue to decline [5] Company-Specific Insights BXP Inc. (BXP) - BXP, the largest publicly traded U.S. office REIT, focuses on high-quality workplaces in major gateway markets, managing a portfolio of 54.6 million square feet across 187 properties [6] - The company has completed asset dispositions exceeding $1 billion as part of a strategic plan, with a Zacks Consensus Estimate for Q4 2025 revenues at $814.66 million, reflecting a 2.06% year-over-year increase [7][8] Cousins Properties (CUZ) - Cousins Properties benefits from strong leasing activity in high-growth Sun Belt markets, with a diverse tenant base supporting steady cash flows [9][10] - The company is set to report Q4 2025 earnings on Feb. 5, with a revenue estimate of $248.65 million, indicating a 12.91% year-over-year increase [11] SL Green Realty (SLG) - SL Green focuses on Manhattan office assets, operating a portfolio of 30.7 million square feet across 53 buildings, but faces competition and is offering rent concessions, impacting revenue growth [12][13] - The company is expected to announce Q4 2025 earnings on Jan. 28, with a revenue estimate of $147.03 million, suggesting a 5.32% year-over-year rise, but a decrease in FFO per share by 24.14% [14] Highwoods Properties (HIW) - Highwoods Properties, focused on the Sun Belt, owns and operates premier office assets, benefiting from regional growth trends [17] - The company is set to report Q4 2025 earnings on Feb. 10, with a revenue estimate of $208.23 million, indicating a 1.31% year-over-year rise [19]