Highwoods Properties, Inc. (HIW): BCG Matrix [Dec-2025 Updated]

You're looking for the clearest picture of Highwoods Properties, Inc.'s portfolio health as of late 2025, so here's the distilled truth: the future growth engine is clearly the new Class A developments in Nashville and Raleigh, while the steady dividend payers are the stabilized, high-occupancy assets in core markets like Raleigh-Durham. On the flip side, we've flagged older, non-core office buildings as Dogs ripe for disposition, and the big capital bets-like speculative starts and land bank plays-are currently sitting as Question Marks demanding close monitoring. Dive in below to see the exact assets falling into each of these four critical buckets.

Background of Highwoods Properties, Inc. (HIW)

Highwoods Properties, Inc. (NYSE:HIW) is a fully-integrated office real estate investment trust (REIT) based in Raleigh, North Carolina. You'll find their properties concentrated in the best business districts (BBDs) across several key U.S. markets. These markets include Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, Richmond, and Tampa. The company frames its business around 'work-placemaking,' aiming to create environments that deliver greater value to customers and stakeholders.

As of late 2025, Highwoods Properties, Inc. continues to execute a disciplined capital-recycling strategy. This involves selling non-core assets and reinvesting the proceeds into premium acquisitions and development projects. For instance, in early 2025, the company closed on the sale of non-core buildings in Raleigh and Tampa for combined gross proceeds of $166.4 million. More recently, in the third quarter of 2025, they sold a non-core office building in Richmond, VA, for $16 million.

The company has actively acquired new, high-quality assets to bolster its portfolio. In March 2025, Highwoods Properties, Inc. completed the acquisition of the Advance Auto Parts Tower in Raleigh for $138 million. Furthermore, in November 2025, they closed on the acquisition of 6Hundred at Legacy Union in CBD Charlotte. They also purchased the Legacy Union Parking Garage in Charlotte for $111.5 million during the third quarter of 2025.

Looking at the operational metrics from the third quarter of 2025, Highwoods Properties, Inc. reported Funds From Operations (FFO) of $0.86 per share, meeting consensus estimates, though this was lower than the prior year's 90 cents. Quarterly rental and other revenues were $201.77 million, representing a 1.2% year-over-year fall. At the end of the reported quarter, the in-service portfolio occupancy declined slightly to 85.3%. This was preceded by a Q2 2025 occupancy rate that was stable at 85.6%, with a leased rate of 88.9%.

Despite some top-line softness, management demonstrated confidence by raising the full-year 2025 FFO outlook to a range of $3.41 to $3.45 per share, marking the third consecutive increase. The development pipeline was reported to aggregate $474 million (at HIW share) and was 72% pre-leased as of the third quarter. To be fair, the company has a long history of shareholder returns, maintaining dividend payments for 32 consecutive years, with a healthy dividend yield of around 6.74% reported in mid-2025.

Highwoods Properties, Inc. (HIW) - BCG Matrix: Stars

The Star quadrant for Highwoods Properties, Inc. (HIW) is characterized by assets and development projects operating in markets experiencing high growth and commanding premium pricing, which translates to high market share within those specific, desirable submarkets. These are the properties where you are actively investing capital to maintain leadership and secure future Cash Cow status.

New Class A developments in Nashville and Raleigh are central to this category, as they are positioned to drive future Net Operating Income (NOI) growth. The leasing momentum in these markets is strong; for instance, leasing activity was robust across the entire platform, 'most particularly in our Dallas, Tampa and Raleigh developments and our Highwood-tizing redevelopments in Nashville'. The 5 million square foot Nashville portfolio continues to see broad-based demand.

Projects recently completed in 2024/2025 are now in the critical lease-up phase, moving toward stabilization. As of the third quarter of 2025, there are 4 completed but not yet stabilized development properties contributing to a projected $30 million stabilized annual future NOI growth potential. The leasing progress on these specific projects is significant, with the lease percentage across the development pipeline reaching 72% in the third quarter of 2025, an increase from 64% the prior quarter. This pipeline was 64% pre-leased against a total development cost of $474 million (at HIW share) as of the second quarter of 2025.

Highwoods Properties, Inc. (HIW) maintains a strategic focus on the best-located, highest-quality office assets in Sunbelt cities, which generate over 95% of its net operating income. This focus is reflected in strong rent growth metrics across the portfolio. GAAP rents ended the third quarter at a record $40-plus per square foot, representing an 18% increase compared to expiring rents.

Midtown Atlanta is a clear example of a high-growth submarket attracting premium rents. In the first quarter of 2025, Midtown commanded the highest average rental rate among Atlanta submarkets at $41.46 per sq. ft.. By the second quarter of 2025, the direct asking rent for the broader Atlanta market was $33.42 per square foot. Midtown also showed strong leasing velocity, surpassing all other submarkets with 389,186 sf of occupancy gains in the second quarter of 2025.

Here are key operational and financial metrics supporting the Star classification as of late 2025:

The properties and markets identified as Stars are consuming cash for lease-up and tenant improvements but are expected to generate substantial future cash flow, which is why you must continue to invest in them. The strategy involves:

• Maintaining high leasing velocity across the development pipeline to push the lease percentage above the current 72%.
• Focusing capital expenditure on the 4 properties driving the $30 million future NOI upside.
• Securing new leases in the 5 million square foot Nashville portfolio.
• Capitalizing on the high-rent environment in submarkets like Midtown Atlanta, where Class A rates reached $41.46 per sq. ft. in Q1 2025.
• Ensuring the pipeline of properties expected to stabilize in 2026 and 2027 are fully leased.

Highwoods Properties, Inc. (HIW) - BCG Matrix: Cash Cows

Stabilized, high-occupancy Class A office portfolio in core Raleigh-Durham represents a significant portion of Highwoods Properties, Inc.'s asset base, with Raleigh being the largest single market at 23.3% of Net Operating Income (NOI) as of Q1 2025.

Mature, well-leased properties in Tampa, alongside other established Sunbelt markets where over 95% of Highwoods Properties, Inc.'s NOI is derived, are providing consistent Funds From Operations (FFO). The nine months ended September 30, 2025, saw FFO reach $284.2 million, or $2.58 per diluted share.

Long-term leases with credit tenants in established Sunbelt markets contribute to cash flow predictability. The weighted average lease term for second-generation leasing in Q3 2025 was 6.7 years. The tenant base is diversified, with no single tenant accounting for more than 4% of revenue. Key sectors include Finance and Banking at 19% of annualized revenue, Legal and Accounting Services at 16%, and Insurance at 11%.

Highwoods Properties, Inc.'s high-market-share assets, concentrated in the Best Business Districts (BBDs) of its core markets, generate strong, predictable cash flow. The company raised its full-year 2025 FFO per share guidance to a range of $3.41 to $3.45. The year-end 2025 occupancy outlook is projected to be between 85.7% and 86.3%.

The operational metrics supporting the Cash Cow status include:

• In-service portfolio occupancy (HIW share) at the end of Q3 2025 was 85.3%.
• Q1 2025 occupancy stood at 85.5%.
• The leased rate increased to 88.9% in Q2 2025.
• Second-generation leasing volume in Q3 2025 was 1.0 million square feet.
• GAAP rent growth for second-generation leases in Q3 2025 was 18.3%.

Key financial performance indicators for Highwoods Properties, Inc. as of the latest reported periods in 2025:

Highwoods Properties, Inc. (HIW) - BCG Matrix: Dogs

Dogs represent business units or properties characterized by low market share within low-growth markets, frequently breaking even or consuming cash without significant returns. For Highwoods Properties, Inc. (HIW), these are the assets actively being pruned from the portfolio or those struggling with utilization despite being in the core Sunbelt footprint.

The strategy here is clear: divestiture and minimization. Expensive turn-around plans are generally avoided for these assets, as capital is better deployed into the Stars or Question Marks.

The following data points illustrate the assets categorized as Dogs, based on management's explicit disposition targets and operational underperformance in the 2025 reporting period.

Older, non-core office assets targeted for disposition in the current cycle are being sold to recycle capital into higher-growth opportunities. Dispositions closed in the fourth quarter of 2024 and early first quarter of 2025 totaled $166.4 million in gross proceeds from non-core buildings in Raleigh and Tampa. Separately, a non-core office building in Richmond, VA, was sold during the third quarter of 2025 for $16 million.

The properties explicitly excluded from the 2025 FFO outlook calculation provide a clear view of units management views as drags on current performance, often due to low occupancy or being outside the primary focus area for future growth:

• Two Alliance Center in Atlanta.
• Symphony Place and Westwood South in Nashville.
• 625 Liberty Avenue (formerly EQT Plaza) in Pittsburgh.

These four in-service properties were specifically projected to be significantly under-occupied during 2025.

The following table summarizes the financial impact and characteristics of recent disposition activity, which directly relates to shedding Dog assets:

Properties in markets or submarkets with lower long-term growth prospects are implicitly those outside the core Sunbelt focus, though the company's strategy is heavily weighted toward the Sunbelt, which accounts for over 95% of its net operating income. The properties being sold are often those that do not meet the criteria for the 'best business districts' (BBDs) or those in submarkets facing structural headwinds.

Assets with high capital expenditure needs and below-average occupancy rates are prime candidates for divestiture. The overall in-service portfolio occupancy stood at 85.3% as of the third quarter of 2025. Management noted concerns regarding the elevated leasing CapEx required to push occupancy higher. Furthermore, same-property cash NOI decreased by 3.6% year-over-year in the third quarter of 2025, largely driven by the occupancy decline.

The company's overall portfolio metrics for context show the challenge in the segment these Dogs represent:

• In-service portfolio occupancy (HIW share) as of Q3 2025: 85.3%.
• Expected average occupancy for remainder of 2025: 85.0% to 86.0%.
• Same-property cash NOI growth (Q3 2025 vs. Q3 2024): -3.6%.
• Total available liquidity at end of Q2 2025: over $700 million.

Smaller, non-strategic properties outside the core Sunbelt focus are addressed through the capital recycling program. While the core Sunbelt markets include Atlanta, Charlotte, Dallas, Nashville, Orlando, Raleigh, and Tampa, the sale of the Richmond asset and the general program of selling non-core buildings are the mechanisms to reduce exposure to these lower-tier assets.

Highwoods Properties, Inc. (HIW) - BCG Matrix: Question Marks

You're looking at the segments of Highwoods Properties, Inc. that are in rapidly expanding markets but haven't yet secured a dominant position or stabilized their cash flow-the classic Question Marks. These are the speculative bets that require significant upfront capital to prove out their potential.

Speculative development starts that require significant capital investment before lease-up represent the core of this quadrant for Highwoods Properties, Inc. These projects are consuming cash now with the expectation of becoming Stars later. As of September 30, 2025, the development pipeline aggregated $474.2 million at the company's share, with 71.9% pre-leased. This pre-lease percentage, while strong, still means a significant portion of the new square footage is yet to generate its full stabilized Net Operating Income (NOI).

The cash burn is evident in the funding requirements. As of the third quarter of 2025, Highwoods Properties, Inc. had only $96 million left to complete this development pipeline, down from $106 million remaining at the end of the second quarter of 2025. This expenditure impacts near-term cash flow; for instance, cash flows during Q3 2025 were impacted by high expenditures for leasing capital ahead of projected occupancy build. The potential return on these investments is substantial, with four completed but not yet stabilized development properties holding a combined $30 million of stabilized annual future NOI potential, over 70% of which was already secured by signed leases as of the third quarter of 2025.

Land bank holdings in high-growth markets awaiting optimal development timing are represented by recent, strategic acquisitions in their core Sunbelt markets. These are investments made in anticipation of future growth, requiring capital now. In the first nine months of 2025, Highwoods Properties, Inc. completed buyouts worth $249.5 million, signaling a commitment to deploying capital into high-growth areas. The company has also highlighted the potential for up to $500 million in both acquisitions and dispositions over the next few quarters, suggesting an active, capital-intensive strategy in this area.

The acquisition of the 6Hundred at Legacy Union for $223 million in Charlotte's Uptown CBD is a prime example of a large-scale, high-potential investment that needs time to mature to its full earning power. This asset is 84% leased, meaning the remaining 16% represents the immediate market share growth opportunity that is still being realized.

The following table summarizes the capital deployment and leasing status of these growth-oriented assets, which are candidates for the Question Mark quadrant:

New market entries or smaller-scale projects where market share is low but growth potential is high are characterized by the company's focus on Sunbelt markets, which align with demographic trends showing 3.0x population growth and 1.9x employment growth compared to the U.S. average from 2010 to 2024. While the overall portfolio is concentrated in these areas, new projects start with a low relative market share.

The strategy here is to aggressively invest to gain share quickly. The company is actively pursuing new investments aimed at accelerating long-term growth. The success in driving up rental rates suggests that when these new spaces are leased, they command a premium, which is the desired outcome for a successful Question Mark transition:

• Net effective rents were 18% higher over the trailing four quarters compared to the 2019 average.
• Second-generation leasing drove leased percentage to 72% in Q3 2025, up from 64% last quarter.
• The company raised its full-year 2025 Funds From Operations (FFO) outlook to a range of $3.37 to $3.45 per share.
• Q2 2025 FFO was $0.89 per diluted share.

Mixed-use components of developments that are still proving their long-term value proposition are less explicitly detailed in the latest reports, which focus heavily on the core office product. However, the general development pipeline, which includes assets like the Legacy Union Garage acquisition, represents the company's current high-growth, high-investment bets that must rapidly convert their high growth prospects into high returns to avoid becoming Dogs.