12/22/2017 | By Sarah Borchersen-Keto
Donald Miller, president and CEO of Piedmont Office Realty Trust, Inc. (NYSE: PDM), joined Nareit for a video interview at REITworld 2017.
Piedmont owns and manages class-A office buildings located in submarkets primarily within eight major office markets in the Eastern United States.
Miller noted that Piedmont’s leasing activity in the first three quarters of 2017 did not reach levels that had been hoped for. However, Piedmont expects the fourth quarter to be the most robust, he said.
From a balance sheet perspective, Piedmont is “probably in the best position we’ve ever been,” according to Miller. The company expects to close on the sale of 14 assets in early January, which should reduce Piedmont’s leverage to its lowest level to date, he noted.
As for individual market performance, Miller noted that the Sun Belt region is probably the strongest right now. Chicago and Minneapolis are performing “quite well,” while Houston is probably the weakest market, he said. Washington, D.C. continues to be “a little bit of a drag on us,” Miller added.
Meanwhile, Miller said he sees “pretty good equilibrium” between supply and demand in the office market overall.
Class-A office space is still transacting at lease rates that are “well below what it would cost to build new product and get lease rates associated with that new cost,” according to Miller.
“That broad gap is giving us comfort that there isn’t going to be a lot of new supply,” Miller said.