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Cousins and Hines Go Ahead With Tempe Mixed-Use Project

Cousins Properties Inc.CUZ and Hines Interests LP are moving ahead with the Tempe mixed-use project on former Monti's La Casa Vieja's site, per a report from Phoenix Business Journal. Particularly, Cousins and Hines have concluded a $19.5-million buyout of 2.5 acres of land in Tempe, AZ, for the development of this project called 100 Mill.

The acquired location on Mill Avenue and Rio Salado Parkway will be used for the development of a 280,000-square-foot, 15-story office tower and a hotel or multifamily tower. Construction is slated to commence in the second quarter of 2019. However, according to the development agreement, the Hayden House, which is a historic part of the closed Monti's restaurant will be rehabilitated.

This development is likely to witness decent demand in future because together with the Greater Phoenix market, Tempe has progressed and benefits from several networks of public transportation, access to the freeway system and Phoenix Sky Harbor airport. It is home to Arizona State University and has the scope to gain from a dynamic workforce. Moreover, there is high demand for large blocks of office space, which makes this project a strategic one for Cousins Properties.

In addition, mixed-use developments have gained immense popularity in recent years. Such developments lower the distance between housing, workplaces, retail businesses, and other amenities and destinations. Hence, such developments enable companies to grab the attention of people who prefer to live, work and play in the same area - a trend that drove development in several other cities in the United States.

Additionally, Cousins Properties' unmatched portfolio of Class A office assets, located in the Sun Belt markets, augurs well for long-term growth. Particularly, robust fundamentals of the office real estate market in the Sun Belt region have enabled the company to enjoy strong rent growth. Furthermore, opportunistic developments in the best sub-markets keep us optimistic. Also, as the economy revives and job market improves, growth in demand for office space is likely to increase. This will likely result in higher net absorption for the company's portfolio. Nevertheless, stiff competition from other market players and rising supply of office space impacts its ability to attract and retain tenants at higher rents. Rate hike add to its woes.

Cousins Properties currently has a Zacks Rank #3 (Hold). The company's shares have edged down 0.6% in the past month, which is narrower than its industry 's decline of 3.2%.

Stocks to Consider

Better-ranked stocks from the real-estate space include Lamar Advertising Company LAMR , PS Business Parks, Inc. PSB and Outfront Media Inc. OUT . Each of these stocks carries a Zacks Rank of 2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Lamar's FFO per share estimates for 2018 has been revised marginally upward to $5.42 in the last 60 days.

PS Business Parks' Zacks Consensus Estimate for 2018 FFO per share moved 1.3% north to $6.45 in the past two months.

Outfront Media's FFO per share estimates for the current year has been revised 2% upward to $2.09 in two months' time.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) - a widely used metric to gauge the performance of REITs.

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PS Business Parks, Inc. (PSB): Free Stock Analysis Report

Cousins Properties Incorporated (CUZ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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