Highwoods Properties' Strategic Acquisition of Legacy Union Parking Garage: A Catalyst for Cash Flow and Long-Term Growth in Charlotte's BBD Market

Highwoods Properties' recent $111.5 million acquisition of the Legacy Union Parking Garage in Charlotte's Uptown district is a masterstroke of strategic real estate positioning. This move not only bolsters the REIT's immediate cash flow but also cements its dominance in a high-demand Business District (BBD) market poised for sustained growth. By integrating a critical infrastructure asset into its existing portfolio, Highwoods is leveraging Charlotte's economic momentum to enhance asset control, secure long-term revenue streams, and capitalize on the city's evolving urban landscape.

Strengthening Cash Flow Through Leverage and Connectivity

The acquisition is projected to generate $8.0 million in cash and GAAP net operating income within the first four quarters post-closing. This immediate boost is underpinned by the garage's 70% revenue tied to long-term leases with Highwoods' office tenants, including Bank of America Tower and 650 South Tryon. These leases, with an average remaining term of nine years, provide a stable, inflation-protected income stream. The remaining 30% of revenue, derived from transient parking and special events, taps into Charlotte's thriving event economy, including demand from the nearby Bank of America Stadium.

Charlotte's BBD market has seen a surge in corporate relocations and infrastructure investments, from Daimler Truck Financial Services' U.S. headquarters move to Ballantyne to the PGA Championship's 2025 return. These trends underscore the city's appeal as a logistics and business hub, with Highwoods' parking garage serving as a linchpin for tenant connectivity. The skybridge linking the garage to Highwoods' office properties not only enhances tenant convenience but also reduces turnover risk by embedding the REIT's assets into the daily operations of its clients.

Enhancing Asset Control in a Competitive Market

Highwoods' acquisition extends its control over a critical component of Charlotte's urban ecosystem. By owning the parking infrastructure that supports 1.2 million square feet of its office space, the REIT mitigates third-party dependencies and strengthens its value proposition to tenants. This vertical integration is particularly valuable in a market where demand for premium office space is outpacing supply. For instance, SouthPark's shift toward luxury retail and the Savona Mill's adaptive reuse project highlight Charlotte's premiumization of commercial real estate, a trend Highwoods is well-positioned to exploit.

The REIT's strategic alignment with Charlotte's infrastructure investments further solidifies its asset control. North Carolina's new transportation funding bill, aimed at improving regional mobility, complements Highwoods' focus on connectivity. By ensuring seamless access to its office tenants, the REIT not only enhances tenant satisfaction but also differentiates itself in a market where proximity to transit and amenities is a key differentiator.

Positioning for Long-Term Growth in a High-Demand BBD Market

Charlotte's BBD market is a microcosm of the Southeast's broader real estate dynamics. From 2023 to 2025, the region has seen robust job creation, corporate relocations, and infrastructure spending, with cities like Nashville and Dallas/Fort Worth emerging as top investment destinations. Highwoods' acquisition aligns with these trends by securing a high-traffic asset in a submarket experiencing strong demand.

The Southeast's industrial real estate boom, particularly in logistics and warehousing, also bodes well for Highwoods. While the Legacy Union Garage is a parking asset, its proximity to Huntersville's industrial developments and Charlotte's role as a regional supply chain hub position it to benefit from cross-sector demand. As companies prioritize urban infill locations for last-mile logistics, Highwoods' Uptown presence becomes increasingly valuable.

Investment Implications and Strategic Outlook

Highwoods' acquisition is a testament to its disciplined capital allocation strategy. At a 6.8% dividend yield and a $3.2 billion market cap, the REIT offers a compelling risk-rebalance for income-focused investors. The extended $200 million term loan, with a maturity date pushed to 2029, provides financial flexibility to pursue further accretive opportunities in Charlotte and other Southeastern markets.

For investors, the key takeaway is clear: Highwoods is not merely acquiring a parking garage but securing a strategic asset in a market with structural growth drivers. Charlotte's corporate relocations, infrastructure investments, and event-driven economy create a tailwind for the REIT's long-term value. As the Southeast continues to outperform national real estate trends, Highwoods' focus on high-demand BBD markets positions it as a prime beneficiary of the region's economic trajectory.

In a landscape where REITs often face headwinds from rising interest rates and shifting tenant preferences, Highwoods' acquisition of the Legacy Union Parking Garage exemplifies how strategic asset control and market alignment can drive sustainable growth. For those seeking exposure to a REIT with a proven track record in high-conviction markets, Highwoods' move is a compelling case study in capitalizing on urbanization and economic momentum.