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C. Brent Smith

Thanks, Laura. Good morning, everyone, and thank you for joining us today as we review our fourth quarter and annual 2024 results. In addition to Laura, on the line with me this morning are George Wells, our Chief Operating Officer; Chris Kollme, our EVP of Investments; and Sherry Rexroad, our Chief Financial Officer. We also have the usual full complement of our management team available to answer your questions. Before I get into Piedmont specific results, I'd like to take a moment and discuss the continuing improvement in the office market fundamentals and the near-term growth opportunities for our business.
No doubt, the perception around office space turned the corner in 2024 with many major employers and Piedmont tenants such as Salesforce, Amazon, UPS, AT&T and Starbucks, just to name a few, continuing to prescribe greater in-office attendance. We've witnessed this dynamic for companies, small and large, implementing a workforce strategy that utilizes office space to build corporate culture, foster collaboration, push the boundaries of creative thinking and to communicate most effectively. The need for well-located, amenitized and differentiated office space has never been more important for a company. And as a result, demand continues to grow for well-priced, high-quality, high-service operators and buildings, which is very much aligned with Piedmont's strategy and with virtually no new construction and supply growth at historic lows for the next 2 to 3 years, we believe the market for high-quality office space will tighten in 2025 and for the years following, providing the backdrop for strong increases in rental rates across the portfolio, but particularly our Sunbelt markets. The fourth quarter witnessed positive yet modest net absorption according to JLL's National Office Report, levels not seen since 2021, with 3 of Piedmont's markets, Dallas, Orlando and New York included in the list of those reflecting these positive trends.
In addition, on a national basis, gross leasing volumes have improved each of the last 3 quarters, reaching post-pandemic highs with the fourth quarter coming in at 92% of pre-COVID averages. However, I'd note that this demand is more concentrated than ever at the top end of the market. As we've discussed before, 90% of the vacancy resides in the bottom 30% of the office stock. As a result, we're starting to see demand at the top of the market outpace supply. In addition, the uncertainty regarding tariffs and labor costs further validates Piedmont's strategy of acquiring existing assets in desirable locations and bringing them up to today's standards.
And the recent announcements regarding the federal government's rationalization of its office space should have limited to no impact on Piedmont, given that the GSA represents approximately 0.5% of our annualized revenue. As we look back at what Piedmont accomplished in 2024, we achieved a number of our strategic goals, but our leasing success certainly tops the list. During 2024, we completed 2.4 million square feet of total leasing, the most leasing we've completed on a annual basis since 2015, and we grew cash basis same-store NOI by 2.6%, with both metrics well above our original projections and guidance for the year. Over a 1 million square feet of our 2024 leasing was related to new tenant leases, resulting in absorption for our in-service portfolio and a year-end lease percentage of 88.4%. Additionally, the leases we executed during 2024 reflected very strong rental rate growth, approximately 12% on a cash basis and almost 20% on an accrual basis, the strongest growth we've experienced in the past 5 years on an accrual basis and in over a decade on a cash basis.
During 2024, we also saw incremental liquidity coming into the office sector. National office transactional activity, albeit still at historic lows, started to improve, up 29% year-over-year. We were able to capitalize on this uptick to accomplish another 2024 strategic goal by disposing of 2 properties, which generated approximately $77 million of gross proceeds. As office fundamentals continue to improve, debt financing is becoming more readily available and spreads continue to tighten for high-quality assets. As Chris will touch on in his remarks, this bolsters our expectations to dispose of select noncore and mature assets in 2025.
As expected, our refinancing activity continued in full force and was a top strategic goal for 2024. The team did an outstanding job to complete a $400 million bond offering in June at a significantly improved credit spread compared to our 2023 offering. And just this week, we completed some additional transactions that Sherry will go into in more detail about in a moment. The headline being that we now have no debt with a final maturity until 2028. Finally, core FFO for the year was $1.49 per diluted share and reflected approximately $22 million or $0.17 per diluted share of increased net interest expense as compared to the previous year.
Additionally, our 2024 results reflected the sale of 2 properties and the downtime between the expiration of a few large leases during the year before newly executed leases commenced late in 2024 or will commence in 2025. No doubt, there is still work left to do, and George will provide market specifics and details on the leasing pipeline in a moment. But we continue to believe that the investments we've made in our portfolio, combined with our relentless focus on best-in-class service and a sustainability mindset are resonating with the market, clients and the brokerage community and the demand for highly amenitized, well-located work environments operated by a financially stable landlord will continue to grow throughout 2025. We believe our portfolio is well positioned to capture more than our market share of customer demand, and we will be able to continue to drive leasing percentage and rental rate growth this year. 2025 contractual expirations are very manageable with roughly half already filled or close to being backfilled.
We expect our backlog of approximately 1.4 million square feet, representing roughly $46 million of future annual cash flow to benefit our financial results during the latter half of 2025 as those leases commence or reach the end of their abatement period. With that, I'll now hand the call over to George, who will go into more details on fourth quarter operational results.

George Wells

Thanks, Brent. Good morning, everyone. Once again, our well-located, highly amenitized portfolio performed well in the last quarter of the year and the impact of greater in-office attendance is being realized. During the fourth quarter, we completed 45 lease transactions for 433,000 square feet of total overall volume, well within our typical range of 350,000 to 500,000 square feet with renewal transactions dominating the activity. Our 2024 year-to-date haul of over 1 million square feet of new leasing is a record amount not seen since 2016 when our portfolio was approximately 20% larger.
Lower new leasing volumes in the fourth quarter were reflective of users taking longer to make decisions post election, and I'll touch on our robust pipeline in a moment, but we believe the slowdown was related to economic uncertainty post election, as well as a shortened period between Thanksgiving and the end of the year holiday slowdown. Importantly, we have witnessed a more normalized level of new leasing in the first quarter. New activity for the fourth quarter was predominantly focused on smaller users, and our retention rate came in at 66%, in line with our historical quarterly average trend of 70%. New leasing activity moved our lease percentage into the middle of our projected range, ending at 88.4%. Lease economics were strong with 11.5% and a 14.7% roll-up or increase in rents for the quarter on a cash and accrual basis, respectively.
Leasing capital spend stayed relatively flat at approximately $6 per square foot per lease year, in line with our average over the past several quarters. Sublease availability continues to hover around 5% of the total portfolio with only 25,000 square feet expiring in 2025. Dallas was our most active segment this quarter, closing on 16 deals for 225,000 square feet or 52% of the company's overall volume. New transactions were completed in each of our 3 submarkets here, which consists of Las Colinas, Uptown and Lower Tollway. Galleria Towers continues to experience strong demand from large users due in part to its superior accessibility located at the nexus of 2 major highways, the Lower Tollway and North Tollway and is also considered a most centrally located submarket in Dallas.
Kimley-Horn, a national engineering firm extended on all of its 83,000 square feet at the complex for another 10 years. Also at Galleria, a large international e-commerce retailer re-leased 43,000 square feet to accommodate its new 5-day a week return to office mandate. We're also in the legal stage for a large user to backfill a substantial majority of Ryan's lease at 3 Galleria Towers, which is scheduled to expire during the first quarter of 2025. Galleria's exceptional location and many rich environment and hospitality infused redevelopment have allowed us to increase net rental rates by 10% over the past year and approximately 30% since acquisition in 2020. This unique 1.5 million square foot project has had an incredible success story for Piedmont.
The project stands at over 90% leased with an opportunity to push rents even higher, now approaching $40 on a net rent basis, resulting in strong economics on Piedmont's book basis of approximately $280 a square foot. Moving to suburban Boston. Our third largest deal in the quarter was a renewal transaction at our Wayside complex in Burlington, where we extended a large technology company's lease for its entire 33,000 square foot footprint for a 7-year term. In Boxborough, 2 new deals were completed for 13,000 square feet at 80 Central Lab with one of those deals coming from an existing customer expanding its footprint by 30% for 10 years term. The Piedmont formula for attracting and retaining customers worked extremely well in 2024, and we're confident of continued success in 2025.
Today, our leasing pipeline is strong with over 300,000 square feet in late-stage activity. Outstanding proposals stand at 2.6 million square feet for both our in-service and redevelopment portfolios, which is higher than our trailing 12 months. Though demand is strong, the course of quarterly net space absorption is also dependent on the amount and timing of expirations and it remains to be seen whether the uncertainty from the federal administration change really brings will impact corporate decision-making as we move into 2025. Our supplemental report shows 7.4% of our ALR expiring in 2025 with the first quarter having the most exposure for the year. As such, we project lease expirations for the first half of 2025 to moderately exceed our new leasing quarterly average before we resume positive net absorption in the second half of the year.
Assuming there's no downside surprise for the U.S. economy, we project our lease percentage for our in-service portfolio to end the year between 89% and 90%. I'll now turn the call over to Chris Kollme for any comments on investment activity. Chris?

Christopher Kollme

Thank you, George. I'm pleased to report that we are in advanced negotiations for the disposition of 2 small noncore assets, one in Dallas and one in Boston that if both are consummated, will generate approximately $35 million in gross proceeds. We have another 2 to 3 assets that are currently in price discovery, but given market conditions, the outcomes of these efforts are uncertain, although the strategy for selling these assets is entirely consistent with Piedmont's long-standing recycling initiatives. As we have done for years, we will continue to elevate and optimize the portfolio, and we will look to selectively shed noncore assets throughout the year. On the new investments front, we remain highly engaged in each of our key markets, and we expect to see some interesting opportunities in 2025.
These could materialize in a variety of forms, including joint ventures, note purchases and/or our more traditional fee simple acquisition. Our core investment strategy of owning high-quality, differentiated assets located in healthy, thriving markets certainly will not change. While we are in active dialogue, the bar to transact will be high, and there is nothing imminent to report at this time. We remain very focused on executing our disposition pipeline and on continuing to position the balance sheet in order to play offense in 2025. With that, I'll pass it over to Sherry to cover our financial results.

Sherry Rexroad

Thank you, Chris. While we will be discussing some of this quarter's financial highlights today, please review the entire earnings release and the accompanying supplemental financial information, which were filed yesterday for more complete details. Core FFO per diluted share for the fourth quarter of 2024 was $0.37 versus $0.41 per diluted share for the fourth quarter of 2023 and in line with consensus. Approximately $0.02 of the decrease is due to increased net interest expense as a result of refinancing activity over the past year, with the remaining decrease attributable to lower reported rental income due to the sale of 2 properties during 2024, as well as the downtime between the expiration of a few large leases earlier in the year before newly executed leases commence. AFFO generated during the fourth quarter of 2024 was approximately $28 million, providing ample coverage of the current $15 million quarterly dividend and the funding for our foreseeable capital needs.
As we've previously mentioned, CapEx for 2024 was elevated as we concluded several major building redevelopment projects, and we expect lower redevelopment requirements this year. As Brent mentioned, our core FFO per diluted share was $1.49, outperforming consensus by $0.01 and below the prior year's $1.74 due to the factors articulated by Brent earlier. Turning to the balance sheet. Our liquidity position as of year-end was comprised of the full capacity on our $600 million revolving line of credit and approximately $110 million of cash and cash equivalents. I'm pleased to report that yesterday, we amended our $200 million syndicated bank term facility to increase the capacity by $125 million and to add 2 6-month extensions, extending the final maturity to 2028.
We used these new proceeds along with cash on hand and our revolving credit facility to repay the $250 million term loan that was scheduled to mature on March 31st. In conjunction with that transaction, we also recast our revolving credit facility to push the maturity out to 2028 with 2 1-year extension options for a final maturity of 2030. As a result of this activity, as Brent indicated, we currently have no final debt maturities until 2028. Obviously, the large amount of refinancing activity that took place over the last 2 years has resulted in markedly higher interest expense. Fortunately, all unsecured debt maturing for the rest of this decade is expected to be refinanced at lower interest rate, given the current forward yield curve and thus be a tailwind to FFO per share growth.
Further, our large backlog of executed but not commenced leases and leases in abatement begins to burn off later this year and should drive improved FFO results as well as improvement in our credit ratios. Please refer to Page 39 of the supplemental information filed last night for details of major leases that have not yet commenced or are currently in abatement. Turning to guidance for 2025. We are introducing 2025 annual core FFO guidance in the range of $1.38 to $1.44 per share with the following assumptions. We expect executed leasing for the year of approximately 1.4 million to 1.6 million square feet, resulting in an anticipated year-end leased percentage for the company's in-service portfolio of approximately 89% to 90%, exclusive of any speculative acquisition or disposition activity.
Same-store NOI of flat to 3% increase on both a cash and accrual basis for the year. Net interest expense of approximately $127 million to $129 million, versus $119 million in 2024, reflecting a full year of higher interest rates as a result of refinancing activity completed by the company during 2024 and early 2025. General and administrative expense of approximately $30 million to $32 million. As a reminder, this guidance does not include any speculative acquisition disposition or refinancing activity for the remainder of the year. If such transactions occur, we will update this guidance.
To help everyone understand the year-over-year change, the primary positive contribution to projected core FFO growth is a positive $0.04 to $0.08 from higher property operations, which is offset by $0.07 to $0.08 from a full year of interest costs given the refinancings completed in 2024 and early 2025. Core FFO is further impacted by dispositions and modestly higher G&A and weighted average share count. With regard to specific quarterly guidance, as noted in previous calls, we expect quarterly results to improve in the second half of 2025 as the backlog of newly executed leases commence. And with that, I will turn the call over to Brent for closing comments.

C. Brent Smith

Thank you, George, Chris and Sherry. As we turn the page on 2024, we are sure that, as George said, the Piedmont formula is working. The investments that we've made in our portfolio, combined with our customer-centric place-making mindset continue to resonate with existing and prospective tenants. Now that all our refinancing needs have been addressed for the next few years, we will continue to be selective with capital deployment, and our focus in 2025 will be to drive our lease percentage and generate increased rental rate growth, which will ultimately result in FFO and cash flow growth. With that, I will now ask the operator to provide our listeners with instructions on how they can submit their questions.
We will attempt to answer all your questions now or we will follow up with appropriate public disclosure if necessary. Operator?

Question and Answer Session

Operator

(Operator Instructions) nthony Paolone, JPMorgan.

Anthony Paolone

First question relates to the leasing pipeline. I think last quarter, you talked about something in the maybe mid-2 million range. Can you maybe give an update there and kind of what it looks like tenant-wise and size, industry, that sort of thing?

George Wells

Certainly, Tony, this is George. Look, I think what we -- clearly, we had a phenomenal year in 2024 accomplishing about 2.4 million square feet in totality. And as we look in terms of how we came up with our projections and our guidance for 2025, let me break that down in 2 different buckets. From a new deal perspective, we accomplished 1 million in 2024 and I think we really need to back out the [ T&L ] transaction for nearly 200,000 square feet out of that total to get to about 800,000 square feet, which is kind of the ballpark of where we believe we will hit in 2025. And the reason I'm backing out that T&L deal from last year and not able to duplicate that in 2025 is we just don't have another large block of this size in our current in-service portfolio.
So I think from that perspective, we're on a reasonable path. From a renewal perspective, we accomplished -- again, we're 2.4 million in total, back out to [ 1 million ] in new or 1.4 million square feet. We had a couple of large transactions during the year, but we really have a much lighter role in 2025. And in 2025 itself, we already know about Ryan, who's leaving at the end of the first quarter, which we previously announced and is heading [ therein ] on development that's a little further north from our current location. So in totality, we feel it's an assumption that's down the middle of the fairway.
And then getting back to your question in terms of where is -- how is our pipeline and which sectors are we seeing? Well, I would say today, our pipeline is really good. We're looking at late-stage activity, as I mentioned on my call, at about 300,000 square feet. So in the context of where we sit today, we are well on our way to meeting our overall goals for 2025 and comparing that to where we were in the first quarter of 2024, it's a similar trajectory. And then going even further back into proposals or our early-stage proposal list, we have 2.6 million square feet in totality, which is above our trailing 12 months of 2.4 million square feet.
And then when you dig further into that, which is really what is in a new bucket, we're looking at 2 million square feet of new activity and 3/4 of that is for our in-service portfolio. Sectors, coming back to that, we're seeing activity from the insurance sector, law, accounting, engineering firms, and we're even starting to see some activities in the technology sector.

Anthony Paolone

And then just my follow-up is maybe for Brent, just how are you thinking about acquisitions versus dispositions? Because it sounds like on the disposition side, market is not great. You may not want to execute in this kind of market. But I'd imagine there's some similar dynamics on the acquisition side. So how do you weigh -- weighting on the dispositions when maybe the acquisition pricing may change on you, too?

C. Brent Smith

Great question, Tony. Appreciate the time this morning. I'd say, first, we've really taken a lot of effort to position the balance sheet to where we can focus on the portfolio and growth opportunities and disposition opportunities. But with no maturities or final maturities until 2028, we feel like that gives us a really great runway to continue to recycle capital. As we think about 2025, Chris alluded to, we've got a couple of dispositions that are in the hopper and a few more behind that doing price discovery.
I think we take a holistic view to the portfolio. We're always looking to upgrade the quality, update the growth profile. And so you're going to continue to see us focus on those smaller noncore, I'd say, not emblematic of the remainder of the portfolio, i.e., the lowest quality assets initially to dispose of. We will then continue throughout this year, testing what we would call mature well-leased assets and looking to monetize. We're realistic of where the pricing is in the market, but we're also very mindful to continue to move the strategic needle to continue to rotate little further into the Sunbelt.
So we'll look to leverage the Piedmont platform to transform that 80s, 90s, 2000s vintage assets that we go after from an acquisition standpoint. And we are evaluating, call it, $200 million, $300 million on a gross asset value basis assets. But we recognize that the key to being able to grow is really raising equity to target those growth opportunities that is accretive and that will do so and utilize either public or private capital that will coincide with the risk of the asset. So as I talked about that kind of evaluation portfolio or deals that we're looking at, they're predominantly opportunistic in nature. And so as a result, it really wouldn't facilitate or be what we'd look to bring on balance sheet at least day 1, right?
And so we think of those as probably more likely to be done with a joint venture partner. We own 100% of all our assets, and we feel like that doesn't add a lot of complexity to the balance sheet if we were to go after a few assets in that manner. We typically be maybe 10%, 20% of the equity in that venture. And again, we'd be looking for low basis, 20-plus percent IRRs. And those assets would generally take 2 to 3 years to reposition.
So we think about really then that creating a potential pipeline for acquisitions once the markets do start to stabilize in more normalized environment. But we're going to utilize our same recycling strategy to continue to pull the kind of bottom quality. There would be modest dilution potential in some of those dispositions, but I think moving the strategic needle and improving the quality of the overall portfolio and again, the growth profile will make up for that in the multiple. And again, we feel like there's -- we can take our time, what we've got in terms of dispositions planned for this year. We feel like we'll fill that equity bucket in that joint venture program if we find are able to consummate some of those opportunities.
Is that helpful?

Anthony Paolone

Yes. That's great.

Operator

Nick Thillman, Baird.

Nicholas Thillman

Maybe George or Brent, commenting on just the acceleration you guys kind of saw in new leasing to start the year. Just a little bit more commentary on the markets, the type of users that you're seeing on that pickup of activity. And then maybe I know in November, you're touching on in that proposal bucket, you had a decent amount of requirements over 50,000 square feet. Just a little bit more commentary on the larger users within that pipeline.

George Wells

Certainly, Nick. This is George. As I mentioned, we've got 2 million square feet in overall new activity. And when you break it down between the markets, we -- the bulk of that, 35% of that is in Atlanta and no surprise as we've got a large role there in 2026 that we're working on to backfill. But then you've got Dallas that's in around 10% from a new activity perspective.
And Minneapolis does stick out as well as about 28% is related to new activity in Minneapolis. And that's our redevelopment portfolio, right? We've got Excelsior, we've got Meridian Crossings that, as you recall, we had some large vacancies there, but we feel good about it. We've got 500,000 square feet of transactions amongst those 2 assets and about 10 deals over 50,000 square feet a piece. So in totality, though, not just there, but we have 15 transactions that are over -- that are in our proposal stage for over 50,000 square feet.
That's up by 3 from last quarter. So -- and I think I've already hit on the sectors that we're looking at. So I don't think I need to touch that again.

C. Brent Smith

Yes, I would say just to add incrementally on top of that from a sector standpoint, we've seen tech a little bit increase. But for the most part, it's been more of our bread and butter fire, professional services, accounting, engineering, architecture, et cetera. Again, those higher collaboration, we call it maybe a [ print-to-ship ] model businesses.

Nicholas Thillman

And the 1.4 million to 1.6 million square feet of leasing, that doesn't include any sort of like chunkier renewal, say, like a New York City renewal or anything along those lines?

C. Brent Smith

Well, it does include the expected New York City renewal within those numbers. I think as we've talked about, if we were just go ahead and touch on 2026 maturities, I think that's probably what you're alluding to. We are including the city renewals, still expect it to hopefully execute sometime towards the end of the year and the second half of the year. And then as we think about Evershed, there's also a first half of 2026 expiration. That's been reported, and we have noted that they are going to vacate, but we have actually very good velocity behind that, and we've got about half of their space now backfilled as well or in process that were in legal stage.
So we feel very comfortable about continuing to backfill that space before it actually -- Evershed vacates. And then the last larger lease that we have in 2026 would be the Epsilon lease. That's in the second half of the year. It's still a little early to tell. I think we still feel pretty good about the likely outcome of that and they occupy and utilize the space extensively.
But we'll continue to keep the investors updated on that as well on the next call.

Nicholas Thillman

That's helpful. Sherry, just last one. On the lease percentage for year-end, there's no large-scale move-outs or changes to the pool embedded in that number like in 2024 when you had the 2 assets going dark. That 100 basis point improvement at the midpoint is just kind of a clean apples-to-apples comparison.

Sherry Rexroad

Correct.

C. Brent Smith

Yes, that's right. We'll have nothing that will kind of go into the out-of-service portfolio this year. Again, we only would utilize that if the full building went dark given it was a single tenant like those 2 that we put in last year, and they're deep in renovation and having, as George alluded to, really good leasing success. We think we'll have some positive news to share on the next call around those transact -- sorry, those assets, Meridian and Excelsior.

Operator

Dylan Burzinski, Green Street.

Dylan Burzinski

Obviously, it sounds like another decent year, a pretty good year in terms of 2025 being able to push net absorption and not to get too early into how things will shape out for 2026. But to us, that seems like the growth will finally be realized in terms of NOI coming online in 2026. It sounds like there's some larger move-outs. So just trying to get a sense for -- I mean, do you guys think there's enough new leasing in the pipeline to continue to be able to push on this upward trajectory of lease percentage?

C. Brent Smith

Dylan, it's Brent. Yes, I think you capped it well. We had a great year in 2024, and we did have great net absorption. I think we also increased our guidance during the year by 100 basis points in terms of occupancy. And we also hit at the top end of our range in terms of same-store NOI guidance as well, actually exceeded that range from the initial point during the year.
So it has been a great '24. As we look through to '25, we -- as George has alluded to, we have very low expiries and a great pipeline. So we feel like we still got plenty of runway to continue to drive absorption in '25. We feel very comfortable in that 89% to 90% occupancy level. And given where the blocks are coming, you noted, we have some large blocks coming back, that's the Ryan space, which we feel like we've got a backfill tenant very close in that regard, and we'll share more information on the next call.
But then if you think about the remainder of '25, there's really just one other limited larger expiry in the fourth quarter in Minneapolis. So we feel that's very manageable. And so '25, still feel very comfortable with 89% to 90%. If we look at '26, we do have the Evershed lease that will vacate in the second quarter. It will, and I think be very positively received in the marketplace when we share some of the leasing activity that we've got in the building.
It's still a little early, but I feel very comfortable in saying that we'll have that backfilled predominantly at higher rates and meaningful cash roll-ups. And then also within '26, we've talked about the city. We feel very good about maintaining them and keeping them in the space and occupancy for the substantial majority, if not all of the space. And then the remainder of '26 is still a little too early to tell once we get into the second half. But overall, yes, we feel very comfortable where the pipeline is.
It's going to feed the known vacates that we've discussed and continue to drive occupancy higher and cash roll-ups as well will be very positive during that time frame.

Dylan Burzinski

Great. And then just sort of touching on prospects for net effective rent growth. I mean, obviously, as you guys get closer to that 90% leased, it seems likely that and obviously, it's going to depend on specific submarket and assets. But I mean, do you guys see 2026 sort of being an inflection point in being able to push net effective rent growth across the portfolio?

C. Brent Smith

I think we're actually over to the point where we're pushing net effective rent growth, particularly in our Sunbelt markets where we're at 90%, 93%, 94% leased in some of those. And we continue to have top of market rents for our product, but still well below replacement cost of new construction rents. So we feel like we've got a great runway when it comes to the Sunbelt. I'd say suburban Boston, suburban Minneapolis, they've been sluggish. We probably would have said they're flat in ERs.
I probably would still say it's flat to maybe slightly positive as we head into '26. We are seeing, again, in Minneapolis, we're one of the few well-heeled and equipped landlords to fund TIs and improve and create the modern workplace environment. So I think we'll continue to bode very well there. We don't have a lot of vacancy overall in Boston. It's really just in one asset, and that asset is really well positioned for growth.
So -- and Boston, we'll continue to have net effective rent growth, again, modestly low single digits. I'd say New York, we're pretty full. We're just focused on one lease, not much to talk about there. And unfortunately, Northern Virginia doing pretty good. I'd probably say, again, flat to slightly positive NERs.
But the district is structurally very challenging. We would expect there will be probably flat to negative NERs in that market overall. We continue to be very patient. And I would remind investors and yourself that, again, it represents 2 projects and very small percentage of the portfolio that resides in the district. Again, it's about, call it, 5% of the overall ALR.
And again, our GSA exposure is extremely limited. It's less than 0.5% of the portfolio. So with some of the decisions being made out of the new administration, we're expecting limited impact on the portfolio.

Operator

We have reached the end of the question-and-answer session, and I will now turn the call over to Brent Smith for closing remarks.

C. Brent Smith

I want to thank everybody for joining us today. Happy Valentine's Day. We are really excited to share this track record of leasing and operational growth that we've been accomplishing. We've got the positioning and the platform for future growth. We're excited to share more of this at the Citi Conference, if you happen to be there, March 3rd through the 5th in Florida.
And again, I would encourage investors if you haven't had a chance to come to Atlanta, see the portfolio and our strategies in person, we'd love to give you a tour. Please contact Sherry or Jennifer, and thank you today, if that is, if you would like a tour and/or a chance to sit down with management, and thanks for joining today.

Operator

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.