Defense Spending Spurring “Robust” Leasing for COPT

Steve Budorick, president and CEO of Corporate Office Properties Trust (NYSE: OFC), joined Nareit for a video interview at REITworld 2017.

COPT owns office and data center properties primarily in locations that support U.S. government agencies and their contractors, most of which engage in national security, defense and information technology activities servicing priority missions. COPT also owns a portfolio of Class-A office properties.

Budorick commented on the outlook for increased defense spending in fiscal year 2018. He noted that Congress is considering increasing the Department of Defense budget to as high as $600 billion, compared with $534 billion in fiscal 2017. If the fiscal 2018 budget is increased to the $600 billion range, Budorick noted that it would be the biggest increase since that seen in the wake of the 9/11 attacks.

The impact of the fiscal 2017 budget, which was passed in May, should produce “robust” leasing in the fourth quarter of 2017 and first quarter of 2018, Budorick said.

Budorick also said the current locations of COPT’s assets bode well for COPT’s continued growth in an environment of increasing spending.

Meanwhile, COPT has been investing in the urban office properties. Budorick highlighted a joint-venture development in Washington, D.C. that is already 43 percent pre-leased even though construction doesn’t start until next year.