Ushering in good news for its shareholders, Highwoods Properties, Inc. (HIW) revealed that it has been selected by Bridgestone Americas, Inc. for developing the latter’s new headquarters in the thriving SoBro district of downtown Nashville.
Specifically, a 30-story, 514,000 square feet Class A building would be developed by Highwoods, provided Bridgestone Americas receives the nod from the Nashville Metropolitan Council, Industrial Development Board and the State of Tennessee. For this build-to-suit project, Highwoods estimates investments of around $200 million, with its delivery aimed for mid-to-late 2017.
This property would include 506,000 square feet of office space, which is 100% pre-leased to Bridgestone Americas, as well as 8,000 square feet of speculative retail and 1,150 spaces of in-building parking.
Since the property would be positioned in Nashville's SoBro, one of the city's best business districts (BBDs), we believe it would enjoy solid demand for its retail spaces as well. Situated close to this yet-to-be developed property is Highwoods’ The Pinnacle at Symphony Place, a 520,000 square foot high-rise, which is estimated to be 98% occupied by year-end.
In fact, Highwoods is the largest office landlord in Nashville, enjoying an ownership of around 3.4 million square feet as of Sep 30, 2014. Of this space, 96.4% is occupied as of that date.
Notably, Highwoods is making concerted efforts to expand its footprint in high growth markets through premium asset acquisitions and developments. The company’s development pipeline now comprises 1.8 million square feet, following the addition of this Bridgestone’s project. This signifies around $549 million in investment and encouragingly, 88.6% of these assets are pre-leased.
Therefore, although this real estate investment trust (“REIT”) reported lower-than-expected results for the third quarter, we believe that going forward, a solid portfolio in markets with favorable demographic trends would help the company ride on the growth trajectory. Highwoods currently carries a Zacks Rank #3 (Hold).
Investors interested in the REIT industry may consider better-ranked stocks like Cousins Properties Inc. (CUZ), DCT Industrial Trust Inc. (DCT) and STAG Industrial, Inc. (STAG). All these stocks sport a Zacks Rank #2 (Buy).
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