Cousins Properties bullish on job growth in Atlanta area as it expands in Texas; Billy Payne to leave board

By David Pendered

Metro Atlanta has regained all the office jobs it lost during the great recession and job growth is expected to exceed the national average, Cousins Properties, Inc. states in its annual financial report to the federal SEC.

The success of Terminus 100, which Cousins Properties reports is 98.3 percent leased, is one reason Cousins is bullish on metro Atlanta. Credit: jamco-inc.com

The success of Terminus 100, a Buckhead property that Cousins Properties reports is 98.3 percent leased, is one reason Cousins is bullish on metro Atlanta. Credit: jamco-inc.com

In other Cousins news, Billy Payne – credited with helping to bring the 1996 Olympic Games to Atlanta – is to leave the Cousins board of directors after its annual board meeting May 6. Payne, 66, was elected to the Cousins board in 2006 and remains chairman of the Augusta National Golf Club.

This is Cousins’ assessment of the metro Atlanta market, as stated in the 10-K Form the company filed Feb.13 with the federal Securities and Exchange Commission:

  • “The Atlanta metro area, while slower to recover from the recent recession, is showing positive signs of economic growth. Atlanta has reclaimed all of the office jobs it lost during the downturn, and 2013 represents the fourth consecutive year of positive absorption for the office market. The metro area’s diverse economic base coupled with its major research universities provide a platform for positive economic development with job growth forecasted at 2.4 percent compared to the national average of 1.5 percent.”

Cousins outlook is an outlier when compared to other forecasts of regional office job growth, and even in the actual market.

For example: No significant office projects have been started in five years; the deal in 2013 to get Carters Inc. to move to Buckhead involved at least $30 million in sweeteners, according to terms outlined in the $350,000 incentive grant provided by Atlanta; the region’s office vacancy rate is at 20.4 percent, which is more than a third higher than the national average vacancy rate of 14.9 percent at the end of 2013, according to real estate services company CBRE, Inc.

The Colorado Tower, in Austin, is the only office project Cousins Properties is developing. Credit: coloradotower.com

The Colorado Tower, in Austin, is the only office project Cousins Properties is developing. Credit: coloradotower.com

Last month, the Atlanta Fed’s beige book reported that job growth in the southeast was “muted” to “modest,” depending on the sector: “Rather than adding to payrolls, businesses reportedly continued to rely on technology to enhance output.” CBRE cautioned that tenants may need less space in the future if they require employees to work less frequently in the office.

Cousins has cut its staff, as well – by half since 2007. The company listed 470 employees at the close of 2007 and 237 at the end of 2013, according to the 10-K forms.

Nonetheless, the views expressed by the Atlanta-based real estate firm certainly warrant attention. Cousins has beaten the odds since the great recession.

In the 6.5 years since Lehman Brothers downgraded Cousins stock, in December 2007, the investment bank has declared bankruptcy. In the four years since Larry Gellerstedt III has been president/CEO, the company increased its equity market value from $422 million to over $2 billion.

Cousins has sought to diversity its risk by selling non-core assets and acquiring developments in other markets, particularly in Texas. Cousins has boosted its footprint in Texas eightfold in just the past year.

At the end of 2012, Cousins listed its total rentable office footprint in Texas as 1 million square feet. The figure had leapt to 8.1 million square feet as of Dec. 31, 2013, according to the 10-K forms.

Billy Payne intends to exit the Cousins board of directors and continues as chairman of the Augusta National Golf Club. Credit: Getty Images via cbssports.com

Billy Payne intends to exit the Cousins board of directors and continues as chairman of the Augusta National Golf Club. Credit: Getty Images via cbssports.com

The only office construction Cousins listed in its most recent 10-K is in Texas, the Colorado Tower in downtown Austin. This space is being absorbed: A quarter of the 372,000 had been leased by the end of 2013, an additional quarter has been leased this year, and the building is to open at the end of 2014.

Just last year, Cousins invested more than $1.3 billion to purchase two existing developments in Texas.

Cousins paid $230.9 million for Post Oak Central, a Class A office complex in the Galleria area. The seller was an affiliate of J.P. Morgan Asset Management.

Cousins paid a total of $1.1 billion to acquire properties in Houston and Fort Worth – Greenway Plaza in Houston, a 10-building development with 4.3 million square feet; and 777 Main, an office tower in Fort Worth with 980,000 square feet.

In this new portfolio, Houston has become Cousins’ cash cow.

Metro Houston provided 49 percent of Cousins’ net operating income in the final quarter of 2013. Metro Atlanta provided 32 percent, according to the 10-K.

Donna Hyland

Donna Hyland

To succeed Billy Payne on the Cousins board, Cousins CEO Gellerstedt has nominated Donna Hyland, 53, president/CEO of Children’s Healthcare of Atlanta. If elected, she’s to serve on the Audit Committee. A proxy statement that announced Hyland’s nomination states:

  • “President and Chief Executive Officer of Children’s Healthcare of Atlanta since June 2008; Chief Operating Officer of Children’s Healthcare of Atlanta from January 2003 to May 2008; Chief Financial Officer of Children’s Healthcare of Atlanta from February 1998 to December 2002. Director of the Advisory Board of SunTrust Bank of Georgia and Director of the Advisory Board of Stone Mountain Industrial Park, Inc., a privately held real estate company.
  • “In deciding to nominate Ms. Hyland, the Nominating Committee and Board considered her track record of sound judgment and achievement, as demonstrated by her leadership positions as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of a large, integrated health services organization and her leadership positions in a number of significant charitable organizations.”

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

3 replies
  1. Jack Arogeti says:

    “In other Cousins news, Billy Payne – credited with helping to bring the 1996 Olympic Games to Atlanta…”
    Mr. Pendered, referring to Billy Payne as “helping to bring the 1996 Olympic Games to Atlanta” is, forgive me, sir, ridiculous. Billy Payne led the charge from start to finish. No later than 1987, when Atlanta has an image – and largely, self-image ,of “Losersville” in professional sports, at a time when no city have ever won the Games on their first ever try, a time when the world knew the Centennial Games would return to their Athens, Greece birthplace, he wanted to share the experience of the American South with the world. Not even 1984 LA’s Peter Ueberroth served at CEO from start to finish. Billy Payne’s mission gave our City and our State a legacy light years beyond what anyone else had ever achieved – outside of Dr Martin Luther King Jr. Mr. Payne believed and worked tirelessly and selflessly year after year after year for about 10 full years in the most improbable dream; one that came true thanks to his LEADERSHIP and DRIVE.  Yes, of course, others came on and made sizable contributions but it started with one University of Georgia football player who became a real estate attorney and wanting to give back to his community.
    May I suggest a modest but important revision? How about – “In other Cousins news, Billy Payne – the first man who believed Atlanta was worthy of the 1996 Centenniai Olympic Games and dedicated 10 years of his life to making that dream come true”…. 
    I’m sure my suggested re-write can also be improved upon. Thanks for the opportunity to comment.Report

    Reply
  2. david pendered says:

    Hello, sir,
    Thank you for your thoughtful comment. I pondered that description and
    felt it accurate in part because of a report in Fortune by John Huey, the former editor-in-chief of Time Inc., who grew
    up with Payne in Atlanta in the 1950s.
    Huey quotes Bob Holder, of Holder Construction, as saying Payne’s
    campaign had been “intense, but amateur,” until Andrew Young joined the effort.
    “Says Bob Holder: ‘I don’t want to take anything away from everyone
    else’s hard work, but there is no question that Andy is why we won the U.S.
    Olympic Committee’s designation. We had to have a special hook to stand a
    chance, and he was it.’”
    http://money.cnn.com/magazines/fortune/fortune_archive/1996/07/22/214716/index.htm
    Accounts of history are important. I appreciate your
    providing the opportunity to consider these varying perspectives.
    Best regards,
    DavidReport

    Reply
  3. Jack Arogeti says:

    david pendered  
    I appreciate the reply, Mr. Pendered. Thank you, David. 
    No one diminishes the importance of Andrew Young. His globally respected,decades long civil rights work, his former U.N.Ambassador service and so much more are obvious as critical to Atlanta’s winning the Games. Factually speaking, though, it was Billy Payne who believed in the possibility and first dedicated a part of his life to even try to make it happen. After his taking the first steps, over what amount time, I do not know, was he introduced to Ambassador Young. The cover of that Fortune magazine touted them both. But, again respectfully, there is no “varying perspective” who started the initiative. When the  Sept 1987 AJC headline proclaimed Atlanta as “a long shot”, that description was putting it kindly. 
    I really can’t imagine that either Mayor Young or Mr. Holder, or any other dedicated, years long, insiders at ACOG or it’s predecessor bid committee, not giving Billy Payne far, far, more credit than “helping to bring” the Olympics to Atlanta.     
    I d appreciate the varying perspective and would enjoy buying you lunch and chatting about the Atlanta Games and our own related experiences.  Warm regards,  sir.  JackReport

    Reply

Leave a Reply

Want to join the discussion?
Feel free to contribute!

What are your thoughts?

This site uses Akismet to reduce spam. Learn how your comment data is processed.