Piedmont, Highwoods Earnings Calls Reflect Office Market Optimism

The Atlanta office market has rebounded, with companies gobbling up prime space and expanding their footprints, executives from two major REITs said on earnings calls this week.

But a sudden spurt of white-collar layoffs may soon threaten the renewed leasing momentum nationwide, according to CoStar.

Piedmont Realty Trust and Highwoods Properties Inc. reported sharp rebounds in office leasing activity in Atlanta and throughout their portfolios. Highwoods leased more than 1M SF in second-generation office space, while Piedmont signed more than 550K SF in new leases. 

Increased leasing activity helped Highwoods pump up straight-line rent revenues from $1.9M in the third quarter of 2024 to $3.9M in Q3 2025, according to its earnings report. 

Overall, Highwoods reported net income of $12.9M for the quarter, down from $14.5M in Q3 2024. But its $128.6M net income for the year's first three quarters represents a jump of 24% from the same period last year. 

“Pricing power is starting to improve as office users encounter a dwindling supply of high-quality space owned by well-capitalized landlords,” Highwoods CEO Ted Klinck said during Wednesday’s earnings call. 

Piedmont executives echoed the sentiment during its earnings call, reporting the firm leased 724K SF in the third quarter, including 551K SF of new leases. Piedmont has executed 150K SF in October leases, with another 400K SF in the works.

“No doubt, after a challenging four years, the office sector is turning the corner,” CEO Brent Smith said. “Despite generally slow hiring and an uncertain economic outlook, the upward trend in leasing volume signals that tenants still have a strong appetite for office space.”

While Piedmont reported a net loss of $13.5M for the quarter, its same-store net operating income increased nearly 3% as abatements burned off and new leases overtook expiring leases.

New leases are expected to add $40M for Piedmont in annual rents starting in 2026, Smith said. 

In Metro Atlanta, Piedmont had 27 deals encompassing 250K SF, a third of the company’s overall volume.

The Atlanta market as a whole posted a 41% jump in office leasing activity between the second and third quarters, with companies inking 2.1M SF, Bisnow previously reported.

While Metro Atlanta tenants vacated 84K SF more than they took up in the third quarter, well-capitalized landlords with premium properties experienced the most leasing action, with 1.7M SF of leasing activity focused on Class-A space.

Nationally, third-quarter leasing activity prompted the commercial real estate data giant CoStar Group to increase its forecast for U.S. office performance, from a previous anticipation of 4M SF of negative net absorption over the next four quarters to a 10M SF gain.

“The revised forecast accounts for the strongest quarter of occupancy gains since 2019, despite stagnant job growth in traditional knowledge industries,” CoStar National Director of Office Analytics Phil Mobley said in the report. “Many occupiers, anticipating higher office attendance, have recently committed to additional space despite tepid hiring.”

But CoStar cautioned that office gains could be a near-term blip as corporate layoffs among white-collar workers gain momentum. General Motors, Amazon, Comcast and UPS have announced job cuts among management positions. 

During Wednesday's earnings call, Piedmont Chief Operating Officer George Wells said the layoffs have yet to impact office demand.

“We keep seeing announcements with layoffs, but as I kind of reconcile that to what we're seeing in our portfolio, I’m not seeing that affect us yet,” Wells said.