Cousins Properties' Q1 2025: Key Contradictions in Investment Strategies, Rent Recovery, and Market Dynamics

Investment strategy and market opportunities, rent spikes and market recovery, office removals and market activity, activity in leasing pipeline and market demand, and concessions and tenant improvement allowances are the key contradictions discussed in Cousins Properties' latest 2025Q1 earnings call.



Strong Leasing Activity:
- Cousins Properties completed 539,000 square feet of leasing during Q1, with a 3.2% cash rent roll-up, marking the 44th consecutive quarter of positive rent roll-up.
- This was fueled by strong leasing demand and a 90% occupancy rate, driven by improving market fundamentals and limited new office supply.

Positive Market Fundamentals:
- The company reported a 2% increase in same-property net operating income on a cash basis, with leasing volume reflecting 89% of typical pre-pandemic activity.
- This is due to a declining existing office supply, with 10 million square feet removed from U.S. office inventory since 2024, and accelerating demand driven by pent-up need for office space.

Earnings Guidance Increase:
- Cousins increased the midpoint of their full-year guidance to $2.79 a share, representing a 3.7% growth rate, due to higher parking income and lower real estate taxes.
- This growth outlook is supported by the company's fortress balance sheet and strategic focus on driving earnings while maintaining best-in-class leverage.

Diversified Leasing Pipeline:
- The leasing pipeline showed strong activity with over 70% of opportunities being new and expansion leases, skewed towards Atlanta, Charlotte, and Phoenix.
- The diversified pipeline is driven by favorable supply and demand dynamics in key Sun Belt markets, with a favorable outlook particularly in the legal industry.