Highwoods Properties, Inc. HIW recently signed a lease for three floors of the company’s six-story building previously occupied by Laser Spine Institute for its headquarters and an ambulatory surgery center.
Specifically, the company will now rent out 92,000 square feet of space at 5332 Avion inAvion Park, Tampa to Fanatics Brands. Fanatics Brands is Fanatics, Inc.’s in-house apparel division and a new office tenant for Highwoods.
Fanatics has immediate access to the leased space to commence construction of tenant improvements. Hence, Highwoods will account GAAP net operating income (NOI) and include the effect of Fanatics’ lease in occupancy as of year-end 2019. Further, the lease is anticipated to have only nominal impact on 2020 same-property cash NOI.
Per Fanatics Brands management, the lease supports its global growth initiatives and offers collaborative space in Tampa for it to integrate numerous teams under one roof.
Further, Highwoods management noted that the transaction substantiates the company’s standard practice of designing properties aimed to offer long-term, multi-customer office flexibility, including build-to-suits.
Notably, the office property offers structured parking and is located in the Westshore submarket, a best business district (BBD). The building was developed by Highwoods in 2014 for Laser Spine Institute. However, the abrupt shut down of Laser Spine Institute last March impacted Highwoods’ funds from operations (FFO) per share in first-quarter 2019 by 12 cents.
Nonetheless, the strategic location in a BBD, proximity to the Tampa International Airport, flexible design with 29,000-square-foot floor plates, above-market parking ratio and other aspects have likely attracted office tenants.
Highwoods has bagged significant lease agreements in Tampa in recent times. In fact, in September, 2019, 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 is Highwoods’ largest lease expiration remaining through 2021 and through the transaction, the company has significantly reduced its near-term lease rollover risk. Such strong leasing activity is encouraging.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have rallied 8.6%, as against the industry’s decline of 1.6%.
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