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JACKSON, MS-Parkway Properties Inc. was able to celebrate some good news with its Q3 figures as occupancy and FFO both hit in the upper end of the company’s guidance range. FFO totaled $16.2 million for the quarter, compared to $14 million in Q3 2008, while the company’s rent per square foot increased 2.8% to $23.12 compared to $22.25 per square foot, year-over-year.

Same-store occupancy was 88.8%, which was below the 90.9% at the end of Q3 2008.However, president and CEO Steven G. Rogers was pleased, overall, with the results and with some glimmers in the economy. “We’re getting some positive news in the market regarding certain indicators and trends,” he commented, adding, however, that the “return of a healthy office industry will lag by several quarters.”

As the economy continues to slowly pull out of the recession, Rogers predicts that the return of a healthy office environment will lag by several quarters. “The leasing environment remains tough and will continue to do so,” he commented. Parkway Properties is continuing to do “blend-and-extend” renewals, wherever it makes economic sense, he commented.

Parkway Properties’ portfolio will experience a huge roll in tenants come 2011, but Rogers says the company is prepared. With all customers, “we try to engage at least 12 months prior to expiration; for larger tenants, we’re interested in negotiating well in advance,” Rogers remarks.

On the acquisition end. Rogers says Parkway Properties has no buys planned for the remainder of the year, but is optimistic that some action could take place in 2010. It won’t be a tidal wave of acquisitions, he points out. The tidal wave will take a few years to collect.

In the meantime, the acquisition market will remain stagnant for the near term. “The reason is that sellers are putting buildings out there at lower cap rates, while buyers are offering higher cap rates,” Rogers explains. “The differentials are too great for any transactions to take place.”

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