Boston Properties Reports Middling Q2 Results as Workers Remain Hesitant to Return to Offices

No-moat Boston Properties reported middling second-quarter results as workers remain reluctant to return to offices. Physical attendance in restaurants, movies, and other entertainment-related events has reached prepandemic levels, but the recovery in physical office occupancy levels has remained tepid. We believe that the employee behavior is primarily driven by preference and flexibility with regard to returning to office. This is different from the early stages of the pandemic, where the risk of getting the coronavirus was the main reason for lower office utilization. This dynamic does not bode well for the owners of office real estate, as it points to a more permanent shift in worker and employer behavior. Remote work has now become a norm in corporate America. We are also seeing increasing signs of employers accepting remote work and becoming comfortable with the new normal.