Hudson Pacific Properties Achieves Record Leasing and Tripling of Core FFO in Q2 2026
Hudson Pacific Properties recently reported its second quarter earnings for 2026, showcasing a remarkable performance across various fronts. During the call, Victor Coleman, Chairman and CEO, highlighted the company's achievement in signing a landmark 891,000 square foot lease with the City and County of San Francisco at 1455 Market, marking nearly a quarter-century of cash flow visibility.
The leasing momentum continued unabated throughout Q2, as Hudson Pacific secured 1.3 million square feet of new and renewal office leases, representing a significant gain for the company. This record-breaking leasing activity is further underscored by a notable improvement in occupancy, which increased by 470 basis points – the fourth consecutive quarter of gains.
The combined effect of these developments drove same-store NOI up 7.5%, a testament to Hudson Pacific's operational prowess and strategic investments in its office and studio portfolios. Furthermore, the company's cost reductions through Quixote restructuring enabled it to nearly triple Core FFO and achieve a substantial increase on a per-share basis – a remarkable turnaround that bodes well for the future.
The market context also appears favorable, with venture investment reaching $145 billion in Q2, its second-largest and strongest quarter ever. This influx of capital is anticipated to broaden the tenant base beyond large language models into defense tech, AI infrastructure, robotics, and space tech – sectors that hold significant promise for the company's portfolio.
The IPO market is also showing signs of improvement, with pending listings expected to drive further office demand as newly public companies and their ecosystems continue to expand. The landscape across Hudson Pacific's key markets reveals broadening demand, although at different rates in various regions.
San Francisco has posted its seventh consecutive quarter of positive absorption and the largest year-over-year rent increase since 2020, with notable strength observed in submarkets like Foster City, Redwood City, Redwood Shores, and Santa Clara. Los Angeles, meanwhile, is focusing leasing efforts on West Los Angeles, which boasts the market's most robust activity and highest rents.
Elsewhere in the company's portfolio, downtown Seattle has witnessed improvement for its third consecutive quarter, led by leases from prominent companies like Anthropic, Docusign, and Stripe. This has driven the first improvement in CBD vacancy in six years, demonstrating a welcome resurgence in demand for office space.
In studios, Hudson Pacific's prime location studios continue to outperform amidst a mixed production landscape. New York show counts have improved, while Los Angeles remains relatively stable as California's production pipeline works through a meaningful backlog of tax credit approval projects not yet in production.
The company's overarching strategy remains unchanged – restructure Quixote while optimizing performance at its best-in-class assets. Furthermore, Hudson Pacific is making good progress against its $200 million target for dispositions, having sold 2001 Gateway after quarter end and with three additional Bay Area office assets currently in contract or negotiation, alongside its 10950 Washington residential development site.
