Roger Waesche, Jr., president and CEO of Corporate Office Properties Trust (NYSE: OFC), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.
COPT primarily focuses on U.S. government tenants in the defense and information technology sectors. Waesche pointed out that about 50 percent of COPT’s portfolio is focused on the Baltimore-Washington, D.C. corridor. Occupancy in the market overall is about 90 percent, with supply and demand in favor of the landlord, he said. “Concessions are very low, and there is rent growth, so we’re very bullish on that market,” Waesche commented.
About 22 percent of COPT’s portfolio is tied to the Washington, D.C. market, with about 3 percent in the city itself and 19 percent in Northern Virginia. These markets are not as robust as those located closer to Baltimore, according to Waesche.
Meanwhile, Waesche noted that COPT has a commitment to making its portfolio more urban and amenity-rich. As a result, the company has been buying or building properties adjacent to public transit systems and other amenity-rich locations. “We’re swapping out suburban office buildings in order to fund an infill strategy,” he said.
Waesche also noted that after four to five years during which federal government contractors have suffered from the effects of sequestration, the situation now appears to be improving.
“Over the next 12 to 18 months, we think the contractor cycle will get back to a more permanent situation with longer-term contracts,” he said.