Highwoods Adding Office Buildings in Nashville, Raleigh

RALIEGH, NC-Highwoods Properties Inc. is nearing the start for two multi-tenant Class A office buildings in submarkets of Nashville and Raleigh where vacancy in its existing properties is below 7%. The two buildings will total 311,000 sf and cost $46.1 million to develop, including $4.3 million in land acquisition costs. Construction will begin in the third quarter; the anticipated completion date for both projects is the third quarter of 2006. The $20-million Nashville project, Cool Springs III, is a speculative development that will consist of a 153,000-sf six-story building. It will complement Cool Springs I & II, two buildings totaling 360,000 sf that are 100% leased. The larger Cool Springs submarket has a vacancy of less than 2%, according to Highwoods.The Raleigh project, GlenLake Four, will be a 158,000-sf six-story building with structured parking located just off the Glenwood Avenue corridor between I-440 and I-40. GlenLake Four will be built directly across from GlenLake One, a fully leased 158,000-sf building that Highwoods developed previously. As of July 14, commitments from two customers have been secured for 46% of this space. Vacancy in the overall submarket is 11%. These two projects will generate 10% to 11% stabilized cash returns on the total investment, according to a Highwoods president-chief executive Ed Fritsch. Including these two projects, Highwoods’ development pipeline is just over 1 million sf, which represents an investment of $147.2 million. Highwoods controls 30.5 million sf of rentable space in 504 in-service office, industrial and retail properties. It also owns 1,115 acres of development land. Fritsch says that through 2007 the company’s plan is to commence development of $200 million to $300 million of properties in a number of submarkets “where inventory is scarce and where we firmly believe our established land position and leasing team will capture near-term demand.”