Fritsch commented on the steps Highwoods has taken to position itself in the case of a possible change in macroeconomic factors. They include strengthening the balance sheet by lowering debt and paying close attention to maturity ladders. Fritsch pointed out that Highwoods’ debt is now less than 35 percent of the capital stack and that 95 percent of net operating income (NOI) is unencumbered.
Highwoods’ “sizeable” development pipeline adds to that sense of security, Fritsch noted.
Fritsch also discussed the continued rise in construction costs. The company is anticipating a 5 percent to 6 percent increase in total construction costs this year, with a growing component of that rise related to labor costs, he said.