Cousins Properties Bags Lease With Amazon at 100 Mill Site
Cousins Properties CUZ clinches a lease with Amazon for approximately 95,000 square feet at the former’s 100 Mill development project as part of the e-commerce provider’s Phoenix Tech Hub expansion.
Notably, the company is constructing 100 Mill in the joint venture (JV) with Hines and has a 90% stake in the JV. The project is for an 18-story office tower, spanning 287,000 square feet of space in downtown Tempe. Total development costs are projected to be around $153 million, while initial occupancy for the building is anticipated in first-quarter 2022.
Notably, Amazon's lease at 100 Mill was executed prior to Cousins Properties’ announced commencement of the development this February. The development is 44% pre-leased at present and will have Deloitte and Amazon on its tenant roster.
Moreover, Amazon leases additional space at the office landlord’s Hayden Ferry office property that is adjacent to the 100 Mill site.
Per Cousins Properties’ management, Amazon’s “decision to continue investing in new space validates the long-term value proposition of modern and well-located office properties for both companies and employees."
Notably, Cousins Properties has an unmatched portfolio of class A office assets concentrated in the high-growth Sun Belt markets. The region is experiencing a population influx. The demand for office space has been high amid favorable migration trends and pro-business environment.
Hence, despite the secular shift toward work from home amid the pandemic, which reduced new lease deals, 32% of Cousins Properties’ second-quarter leasing activity was new and expansion leasing.
Moreover, the company makes concerted efforts to build a stronger platform with trophy assets’ acquisitions and opportunistic developments in high-barrier-to-entry submarkets in Atlanta, Austin, Charlotte, Phoenix and Tampa. Currently, its development pipeline aggregates $566 million. The office pipeline is 82% pre-leased and is expected to add $66 million of additional net operating income by 2022 end.
However, the coronavirus pandemic has significantly impacted the economy and the real estate sector. Moreover, it resulted in deterioration in the financial condition or liquidity of the company’s tenants, impairing their ability to pay rents.
In fact, Cousins Properties received rent relief requests primarily from its retail tenants and flexible office providers, and deferred $7.5 million of cash rent as of Jul 31. The company expects such deferral activity to continue until the pandemic subsides. This is likely to affect its revenues in the near term.
Moreover, shares of this Zacks Rank #3 (Hold) company have lost 10% over the past year compared with the industry’s decline of 7.9%.
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