Highwoods Properties, Inc.’s HIW office properties are witnessing decent demand for its properties from existing as well as new customers. Recently, the company signed a long-term lease renewal at Highwoods Preserve in Tampa.
The lease renewal is for 176,000 square feet of space. This was Highwoods’ largest lease expiration remaining through 2021 and through the transaction, the company has significantly reduced its near-term lease rollover risk.
In fact, now, the company has only five lease expirations, greater than 100,000 square feet of space, scheduled to end through 2021. Management noted that the lease also secures stable cash flow for the foreseeable future.
Notably, in August, Highwoods signed a lease for 98,000 square feet of space at 11000 Weston Parkway in Cary with a new customer. This marks the company’s achievement of more than 80% leasing of the property that encompasses 178,000 square feet of space and was wholly occupied by Fidelity Investments previously.
Favorable macro-economic factors and a stable economy have been fueling demand for office space. Specifically, the steadily low-unemployment rates and modest wage improvement suggest a decent economy. Amid this, the national office market continues to witness disciplined growth. Moreover, continued job creation in office-using sectors is driving leasing activity and absorption levels of the U.S. office market. As the trend is likely to continue in the remaining year as well, office landlords, including Highwoods, PS Business Parks PSB, Boston Properties, Inc. BXP and Cousins Properties Incorporated CUZ, will witness healthy leasing activity.
As for Highwoods, this is an opportune moment for the company to leverage on the favorable environment and offer real estate support to the office sector. Hence, the company is making moves to fortify its BBD office portfolio through a number of strategic investment actions. Conversely, Highwoods has planned to exit Greensboro and Memphis markets.
Although, such a market rotation plan is anticipated to help Highwoods ride on its growth trajectory over the long run, near-term earnings dilution on account of large-scale asset dispositions is a concern.
Also, shares of this Zacks Rank #3 (Hold) company have gained 12.7%, so far this year, compared with its industry’s 26.1% rally. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
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