BXP's 343 Madison loan prices the cost of office capital
Four banks required about 50% preleasing to fund a 46-story Manhattan tower. The spread, the step-down triggers, and the loan-to-cost ratio are the clearest public benchmark yet for what new office construction debt costs in 2026.
BXP closed a $1.2 billion construction loan for 343 Madison Avenue, a 46-story, 930,000-square-foot Manhattan office tower with a total project cost of roughly $2 billion, the company confirmed in a release tied to its second-quarter earnings. Wells Fargo, Bank of America, Bank of New York Mellon and JPMorgan led the financing.
Why it matters
This is the clearest public data point this year on what it costs to finance ground-up office construction, and every term in it is usable by a sponsor pricing a similar loan. The facility carries a four-year term with a one-year extension option, priced at Term SOFR plus 2.50 percent, stepping down to plus 2.25 percent once BXP hits specified leasing and construction milestones. Four banks required roughly 50% prelease before funding a project of this size, which sets a practical underwriting floor for new office debt in the New York market and beyond. For developers structuring a construction loan today, the step-down mechanism matters as much as the headline spread: lenders are pricing in execution risk and rewarding it away as leasing and construction de-risk the deal, rather than offering a flat rate for the life of the loan.
The numbers
The loan totals $1.2 billion against a roughly $2 billion total project cost, which is a loan-to-cost ratio of about 60% by our own math, neither release states that ratio directly. That $2 billion cost against 930,000 square feet also works out to roughly $2,150 per square foot of total project cost, another figure not printed in either source. BXP says the building is approximately 50% preleased, with Commercial Observer reporting that ongoing negotiations could push that figure toward 70%. Completion is targeted for 2029.
What’s next
Watch whether the step-down triggers get hit on schedule as leasing firms up, and whether other sponsors chasing new office construction debt can clear a similar prelease bar with a four-bank club. BXP CFO Mike LaBelle said the deal “strengthens our financial flexibility,” a signal that the company sees the terms as a template it can point to on future financings rather than a one-off.