Highwoods’ Charlotte Bet: Balancing Growth with Portfolio Quality

CHARLOTTE, NC – November 17, 2025 – Highwoods Properties, Inc. has solidified its presence in Charlotte’s Uptown with the $223 million acquisition of 6Hundred at Legacy Union, a Class AA office tower. The deal, announced last week, isn’t just about adding square footage; it represents a calculated move within a shifting commercial real estate landscape, highlighting a focus on high-quality assets and long-term stability amidst evolving work patterns.

Strategic Shift in a Competitive Market

The acquisition brings Highwoods’ total portfolio at Legacy Union to 1.6 million square feet, underscoring the company’s commitment to Charlotte’s BBDs. This move comes at a pivotal moment for the city’s office market. While Charlotte has experienced robust job growth – leading the nation with a 3.2% increase in office employment – the overall office market has faced challenges with elevated vacancy rates. The new tower is 84% leased with a weighted average lease term exceeding 12 years – offering a degree of stability uncommon in the current environment.

“This wasn’t simply about adding another building to their portfolio,” explained one industry analyst. “It was about securing a long-term cash flow stream from a modern, attractive asset in a desirable location. It’s a flight to quality.”

Highwoods’ strategy reflects a broader trend within the commercial real estate sector: a move away from older, less-amenitized buildings and towards newer, more appealing spaces that can attract and retain tenants in a hybrid work world. However, the timing is strategic – competitors like Cousins Properties are also expanding their Charlotte portfolios, creating a more competitive landscape.

Capital Recycling and Portfolio Enhancement

The acquisition is being funded through a carefully planned capital recycling strategy. Highwoods has been actively selling off non-core assets in recent months, generating approximately $37 million in proceeds. This approach allows the company to shed less-profitable properties and reinvest in higher-quality assets like 6Hundred at Legacy Union. Recent disposals included eight office buildings near Raleigh’s Rex Hospital and three buildings in Tampa’s Westshore submarket.

“They’re effectively pruning the portfolio to make room for growth,” said a source familiar with the company’s financial strategy. “It’s a disciplined approach that allows them to focus on assets with the greatest potential.”

The financial implications of the deal are projected to be positive. Highwoods anticipates the acquisition will be neutral to 2027 Funds From Operations (FFO) and accretive to cash flow, increasing the company’s growth rate and enhancing portfolio quality. The company anticipates that the building will generate between $17.5 and $18.5 million in annual Net Operating Income (NOI) upon stabilization, with $10 million in GAAP NOI expected in 2026.

Impact on Charlotte’s Skyline and Economy

The addition of 6Hundred at Legacy Union further reshapes Charlotte’s skyline and contributes to the city’s economic vitality. The tower’s modern design and amenity-rich features are intended to attract a diverse range of tenants and create a vibrant workplace environment. The building is planned to achieve LEED Gold certification, demonstrating Highwoods’ commitment to sustainability.

“This isn’t just about bricks and mortar,” stated a local economic development official. “It’s about creating a destination that attracts talent, fosters innovation, and drives economic growth. Legacy Union has become a key part of Charlotte’s urban fabric.”

The timing of the acquisition is significant, coming at a time when Charlotte is experiencing strong job growth and a rising demand for high-quality office space. However, the city’s office market remains competitive, with elevated vacancy rates and a growing supply of new construction. Highwoods’ ability to attract and retain tenants will be crucial to the success of the acquisition. The company’s focus on creating “work-placemaking” environments – spaces that foster collaboration and productivity – is likely to be a key differentiator. The company plans to invest $8.5 million in near-term improvements to the property to ensure it meets the evolving needs of tenants.