Don Miller, president and CEO of Piedmont Office Realty Trust, Inc. (NYSE: PDM), joined REIT.com for a CEO Spotlight video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.
Piedmont Office Realty Trust owns and manages office buildings located primarily in the 10 largest U.S. office markets. The company has its headquarters in Atlanta.
Miller summarized the current state of the office REIT market.
“It’s an interesting time for us, because typically you see markets that are much more consistent nationally than we’re seeing today,” he said. “Our portfolio is primarily Class-A offices across a number of markets in the country. We’re seeing some markets that are very strong from a fundamental standpoint, and some that are quite weak from a fundamental standpoint. But we’re seeing everything is fairly aggressive from a cap rate and capital market standpoint, so it’s kind of an odd dynamic to see some markets doing very well, but the capital market still favoring every place similarly. ”
Miller discussed what factors contribute to success in a certain market.
“It’s really much more of a factor of what kind of economic issues are going on in the marketplace,” he said. “We’re seeing anything that has to do with technology, energy, to some degree health care and education—those markets are doing quite well. The markets that don’t have exposure to those industries are not doing quite as well.”
Miller shared his opinion regarding what is needed to get absorption and rent growth back on track.
“It’s kind of the classic problem: We’ve got to generate more job growth,” he said. “And job growth probably comes from both economic activity improvement, of course, but also a political environment that would be more conducive to growth and jobs. We’re seeing a very onerous regulatory environment right now, a difficult tax environment. So, all those things are contributing to lesser job growth than we’d like to see. Until we can see that economic activity, it will be hard for the office market to get back on track where we’d like to see it.”