Piedmont Updates On Q3 Leasing And Capital Market Activities

Piedmont Office Realty Trust, Inc. (NYSE:PDM) recently announced that it has leased around 450,000 square feet in third-quarter 2017. The company also closed two dispositions in the quarter. This included the sale of one of its largest assets — Two Independence Square (NYSE:SQ) in Washington D.C. which operates as NASA headquarters — to Hana Asset Management.

A couple of notable third-quarter new lease deals included a 19,530-square-foot, 12-year lease through 2030 with WithumSmith+Brown PC at SunTrust Center in downtown Orlando, FL, and a 14,472-square-foot, 7+ year lease through 2025 with Robinhood Markets, Inc. at 500 TownPark in Lake Mary, FL. Moreover, FCA US LLC went for lease renewal at the 210,000-square-foot building at 1075 West Entrance in Auburn Hills, MI, through 2024. This building is fully leased to FCA US.

The third-quarter leasing activity reflects steady demand for the company’s properties. In fact, per the company’s executive vice-president of Real Estate Operations “third quarter leasing results reflect steady activity, highlighted by a large lease renewal with a valued international automobile manufacturing tenant."

Also, in addition to the disposition of Two Independence Square which served as NASA headquarters to Hana Asset Management for approximately $360 million, the company completed the sale of its 8560 Upland Drive property in Englewood, CO, to Hendricks Commercial Properties for $17.6 million.

The NASA headquarters building disposition helped the company trim its exposure to the Southwest submarket in Washington, lower overall market exposure to Washington and strengthen its balance sheet through debt reduction. Further, the sale of the 8560 Upland Drive property in Englewood enabled Piedmont to depart from the Denver office market.

Piedmont is engaged in acquisition, ownership, management and development of high-quality Class A office properties located across major U.S. markets. The continued transactional activity indicates its success in selling non-strategic assets and redeploying the proceeds into targeted submarkets.

Notably, the U.S. office market remained upbeat with the vacancy rate declining to 12.9% in the third quarter amid growth in office-using jobs, per a study by the commercial real estate services’ firm, CBRE Group Inc. (NYSE:CBG) . In most of the U.S. office markets, vacancy declined, taking the national office vacancy rate close to its post-recession low. This is likely to benefit the office REITs like Piedmont, Boston Properties, Inc. (NYSE:BXP) , Highwoods Properties, Inc. (NYSE:HIW) and Cousins Properties Incorporated (NYSE:CUZ) in Q3.

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