First Potomac Renews 61,992 SF Lease

CHESAPEAKE, VA-First Potomac Realty Trust has renewed a 61,992-square-foot lease with the Coast Guard in one of its holdings in southern Virginia. The government agency is renewing its full building lease for a ten-year term. The Coast Guard occupies an additional 73,263 square feet in the First Potomac’s Crossways Commerce Center business park for a total of 135,255 square feet. Crossways Commerce Center Business Park, located in the Greenbrier submarket just off Interstate I-64, consists of nine buildings totaling 1.06 million square feet.

First Potomac has been aggressively lobbying its tenants to renew, beginning last year when it pushed to proactively close leases to get ahead of upcoming expirations–a strategy that is now paying off for the firm, according to comments made by CEO Doug Donatelli in the July earnings call.

“In terms of leasing, we signed 100 leases for over one million square feet in the first half of the year,” he told listeners. For Q2, First Potomac signed 100,000 square feet of new leases “with a solid increase in rental rates.” The company also inked 288,000 square feet of renewal leases with a retention rate of 88% in the quarter.

Same-Property NOI in Northern Virginia and Southern Virginia were up nicely in the quarter, he also said. “Our overall NOI was flat because of the poor performance of an isolated few properties in our Baltimore portfolio, not a key market for us but a source of a number of tenants who are struggling in the current economic climate. This shows that, while we made progress on leasing and cost fronts, our tenants are not immune to the economic headwinds.”

For the next four quarters, First Potomac has between 1.5% and 3.5% of annualized base rent expiring each quarter, “leaving us with a manageable exposure to lease roles in the near and medium term,” Donatelli concluded.