Highwoods Provides Leasing Update
- Strong leasing activity with 129,000 SF of new leases signed at 23Springs in Uptown Dallas.
- Total leases signed in the first quarter reach 718,000 SF, including 312,000 SF of new leases.
- Development is a joint venture with Granite Properties, with a total expected investment of approximately $460 million.
- Construction started in the second quarter of 2022, aiming for completion by the first quarter of 2025 and stabilization by the first quarter of 2028.
- 23Springs designed with a focus on sustainability and wellness, pursuing LEED and Fitwel certifications.
- Company aims to own high-quality office buildings in markets like Dallas with positive economic and demographic trends.
- Strong leasing activity not limited to Dallas, with over 700,000 SF of 2nd gen office space leased since January 1, 2024.
- None.
Insights
The announcement by Highwoods Properties, Inc. regarding the 129,000 square feet of additional leases at the 23Springs development is a significant indicator of the property's market demand and the company's strategic positioning. The fact that the development is now 53% pre-leased before its completion is a strong testament to the attractiveness of Uptown Dallas as a business hub. This leasing activity is reflective of broader economic trends within the Dallas metropolitan area which has been experiencing growth in its commercial real estate sector.
From a market research perspective, the commitment to sustainability and wellness, as evidenced by the pursuit of LEED and Fitwel certifications, aligns with the increasing demand for eco-friendly and health-conscious workspaces. This could give Highwoods Properties a competitive edge in attracting tenants who prioritize these values in their office environment.
Furthermore, the partnership with Granite Properties and the substantial investment of approximately $460 million suggest a high level of confidence in the project's success. The development's mixed-use nature, combining office and retail space, is a modern trend in real estate that can drive higher foot traffic and create a synergistic environment for tenants.
Investors in Highwoods Properties, Inc. should consider the implications of the leasing activity on the company's financial health. The pre-leasing rate of 53% is a positive indicator for future revenue streams, potentially leading to a more stable income once the development is completed and operational. It is also noteworthy that the company has signed a substantial amount of leases in the first quarter, including both new and 2nd generation office space, signaling robust demand for the company's portfolio.
The total anticipated investment figure and the projected stabilization date are critical for evaluating the return on investment and the project's timeline. The multi-year span until stabilization in 2028 suggests a long-term strategic approach, where immediate financial benefits may be outweighed by the potential for sustained income and asset appreciation over time.
The development of 23Springs in the heart of Uptown Dallas BBD (Business Business District) is a significant undertaking in urban development. The pre-leasing figures are indicative of a strong market response and the project's alignment with current real estate demands. The strategic plan mentioned by Ted Klinck, focusing on high-quality office buildings in economically favorable areas, is a classic approach in real estate development that targets long-term asset value growth.
The emphasis on 'work-placemaking' and creating 'extraordinary customer experiences' through amenities and innovative wellness features is becoming increasingly important in differentiating commercial properties. These aspects are not just about creating a physical space but fostering an environment that enhances productivity and employee satisfaction, which can be a decisive factor for businesses when choosing a location.
129,000 SF of Additional Leases Signed at 23Springs
Development in Uptown Dallas
23Springs Now
2nd Gen Leasing Activity Continues to be Strong
718,000 SF of Leases Signed to Date in First Quarter
Includes 312,000 SF of New Leases
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RALEIGH, N.C., March 01, 2024 (GLOBE NEWSWIRE) -- Highwoods Properties, Inc. (NYSE:HIW) announced today that leases totaling another 129,000 square feet have been signed at 23Springs, a Class AA development encompassing 626,000 square feet of multi-customer office and 16,000 square feet of retail in the heart of the dynamic Uptown Dallas BBD. The Company is developing 23Springs in a 50/50 joint venture with Granite Properties.
The total anticipated investment for 23Springs is expected to be approximately
Ted Klinck, President and Chief Executive Officer, stated, “Today’s announcement validates our strategic plan of owning the highest quality office buildings in the BBDs of markets such as Dallas with favorable economic and demographic trends. 23Springs is a perfect example of the vision we share with Granite Properties to create extraordinary customer experiences through mixed-use environments, rich amenities, customer-centric service and innovative wellness features – what we call work-placemaking.”
“Leasing activity continues to be strong across our entire portfolio, not just in Dallas. In addition to solid leasing of 1st gen space in our development pipeline, since January 1, 2024, we have leased more than 700,000 square feet of 2nd gen office space, including over 300,000 square feet of new leases,” added Mr. Klinck.
About Highwoods
Highwoods Properties, Inc., headquartered in Raleigh, is a publicly-traded (NYSE:HIW), fully-integrated office real estate investment trust (“REIT”) that owns, develops, acquires, leases and manages properties primarily in the best business districts (BBDs) of Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond and Tampa. Highwoods is in the work-placemaking business. We believe that by creating environments and experiences where the best and brightest can achieve together what they cannot apart, we can deliver greater value to our customers, their teammates and, in turn, our stakeholders. For more information about Highwoods, please visit our website at www.highwoods.com.
Forward-Looking Statements
Some of the information in this press release may contain forward-looking statements. Such statements include, in particular, statements about our plans, strategies and prospects such as the anticipated total investment, projected leasing activity and expected net operating income of properties to be developed. You can identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue” or other similar words. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that our plans, intentions or expectations will be achieved.
Factors that could cause our actual results to differ materially from Highwoods’ current expectations include, among others, the following: the financial condition of our customers could deteriorate; our assumptions regarding potential losses related to customer financial difficulties could prove incorrect; counterparties under our debt instruments, particularly our revolving credit facility, may attempt to avoid their obligations thereunder, which, if successful, would reduce our available liquidity; we may not be able to lease or re-lease second generation space, defined as previously occupied space that becomes available for lease, quickly or on as favorable terms as old leases; we may not be able to lease newly constructed buildings as quickly or on as favorable terms as originally anticipated; we may not be able to complete development, acquisition, reinvestment, disposition or joint venture projects as quickly or on as favorable terms as anticipated; development activity in our existing markets could result in an excessive supply relative to customer demand; our markets may suffer declines in economic and/or office employment growth; unanticipated increases in interest rates could increase our debt service costs; unanticipated increases in operating expenses could negatively impact our operating results; natural disasters and climate change could have an adverse impact on our cash flow and operating results; we may not be able to meet our liquidity requirements or obtain capital on favorable terms to fund our working capital needs and growth initiatives or repay or refinance outstanding debt upon maturity; and the Company could lose key executive officers.
This list of risks and uncertainties, however, is not intended to be exhaustive. You should also review the other cautionary statements we make in “Risk Factors” set forth in our 2023 Annual Report on Form 10-K. Given these uncertainties, you should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements to reflect any future events or circumstances or to reflect the occurrence of unanticipated events.
| Contact: | Brendan Maiorana |
| Executive Vice President and Chief Financial Officer | |
| brendan.maiorana@highwoods.com | |
| 919-872-4924 |
FAQ
How much additional space was leased at 23Springs in Uptown Dallas?
What is the total square footage of leases signed in the first quarter at 23Springs?
When is the expected completion date for the construction of 23Springs?
What is the total expected investment for 23Springs?
Who is the joint venture partner with Highwoods Properties in developing 23Springs?
