Piedmont Office Realty Trust’s Positive Earnings Call Highlights

Piedmont Office Realty Trust ((PDM)) has held its Q3 earnings call. Read on for the main highlights of the call.

Piedmont Office Realty Trust’s recent earnings call exuded a strong positive sentiment, underscored by significant leasing activity and increased rental rates. The company celebrated strategic achievements in sustainability, although it acknowledged challenges in certain markets and delays in key lease renewals.

Record Leasing Activity

Piedmont Office Realty Trust reported a milestone in its leasing efforts, executing approximately 724,000 square feet of total leasing during the quarter. This marks the largest amount of new tenant leasing in over a decade, bringing the year-to-date leasing total to approximately 1.8 million square feet.

Increased Rental Rates

The company experienced substantial rental rate increases, with spaces vacant for less than a year seeing almost 9% and just over 20% roll-ups on a cash and accrual basis, respectively. Across various projects, rental rates increased by an estimated 20%.

Positive Office Demand Turnaround

For the first time in years, U.S. office demand saw a positive shift, with about 12 million more square feet of office space occupied than returned to landlords in the third quarter of 2025.

Strong Financial Performance

Piedmont exceeded consensus Funds From Operations (FFO) by 3% and anticipates sustainable earnings growth, supported by a $40 million backlog of uncommenced leases.

High GRESB Rating

In a testament to its sustainability efforts, Piedmont achieved a 5-star rating and Green Star recognition from GRESB, placing it in the top decile of all participating listed U.S. companies.

Challenges in Washington, D.C. and Boston

Despite overall positive trends, Piedmont faced challenges in Washington, D.C., and Boston, where the company did not experience positive absorption, indicating ongoing market difficulties.

Lease Renewal Delays in New York City

The execution of potential lease renewals in New York City has been delayed into early 2026, raising concerns about tenant retention in this key market.

Higher Leasing Capital Expenditure

Driven by new tenant activity, Piedmont’s leasing capital expenditure increased to $6.76 per square foot, reflecting the higher concessions typically required for new leases.

Forward-Looking Guidance

Piedmont’s guidance highlighted a robust leasing performance, with 724,000 square feet of total leasing completed during the quarter. The company’s in-service lease percentage increased to 89.2%, with a year-end goal of 89% to 90%. A significant backlog of uncommenced leases, nearly $40 million on an annualized basis, is expected to commence by 2026. Core FFO exceeded expectations, and the company narrowed its 2025 annual core FFO guidance to a range of $1.40 to $1.42 per diluted share, supported by strong demand for its high-quality office spaces.

In conclusion, Piedmont Office Realty Trust’s earnings call painted a picture of a company on a positive trajectory, driven by record leasing activity and increased rental rates. Despite challenges in specific markets and lease renewal delays, the company’s strategic achievements and robust guidance underscore its potential for sustainable growth.