Richard Hickson: Sure. Yes. Good morning. So I think my answer is very similar to what we talked about last quarter. I think all of our markets have some positive dynamics in play, but there are competing dynamics as well with rising interest rates and then people returning to work. so a lot of undercurrents. But I continue to point out that Atlanta has been very healthy and strong for us for all of 2023. We executed a lot of leasing volume for its size in Tampa and continue to feel like Tampa is displaying as much as any market the bifurcation between quality and kind of everything else. So the flight’s quality dynamic there is very much in play. But I’d say, the same thing for Phoenix as well. We’ve had really encouraging tour activity there and conversion to leasing activity.
So have positive things to say about every market. Austin, obviously, we’ve called out in the past and continue to flag the fact that there are supply challenges. And our volume has not been as strong there this year. But at the same time, we don’t have a lot of vacancy available to lease. We’re in a very good position with a lot of stability. So we can weather the kind of cyclical dynamics there very well.
Blaine Heck: Great. That’s really helpful. And then, Colin, I understand there are very few transactions to point to in the investment sales market. But can you talk about how your internal return hurdles on new investments have changed with the increase in capital cost and whether or not there are any interesting opportunities that might be emerging on the acquisition side of things?
Colin Connolly: Well, I would definitely say our return expectations have gone up. I think it’s still too early to precisely define our specific kind of cap rate or unlevered IRR, because the market continues to be so fluid. And I think until there’s some stability putting aside the actual nominal kind of interest rate until there’s some stability in terms of the direction of rates, I think that will continue to be fluid. But we are starting to see an uptick in opportunities that we are tracking. I think in many cases, it’s still a bit early to insert ourselves in those opportunities because there are I’d say capital structure dynamics that are still playing out between, in many cases, owner and lenders or mes lenders, But we are tracking a number of situations that are going to require outside capital. And I think it could be interesting opportunities, but we need to be patient and wait for the right time.
Blaine Heck: Great. That’s helpful. Thanks, guys.
Colin Connolly: Thanks, Blaine.
Operator: Our next question will come from Jay Poskitt with Evercore ISI. Please go ahead.
Jay Poskitt: Hi. Good morning. Thanks for taking my question. I was wondering if you could break down the leasing pipeline just between new and renewals and kind of how that just breakdown has changed over the past couple of quarters?
Gregg Adzema: Sure, well, this quarter we executed 35% of our activity was new and expansion. If you look to the late stage leasing pipeline, that’s new and expansion will kind of pop up back to the levels we’ve seen prior to this quarter, so kind of a little over 50%.
Colin Connolly: And Jay, it’s Colin. Those numbers will fluctuate quarter-to-quarter. And really what drives that is going to be kind of the expiration schedule. And based on that expiration schedule, that’s really going to drive what our renewal activity looks like. And so, it will fluctuate quarter-to-quarter.
Jay Poskitt: Great. Thank you. And then, I know that the — sorry, your expirations in 2024 are relatively muted, But do you have any large known move outs as we look ahead to next year?
Colin Connolly: Yeah. Next year we have a low percentage of expirations and we also have very few large expirations. And so looking forward to next year, we really just have one customer within the portfolio that’s over 100,000 square feet, and that would be accruent at Domain 4. We talked about that in past quarters. Our expectation there is that they’re likely to significantly downsize or leave, and again, it’s a little over 100,000 square feet in August of 24. But just to point out, and I think many of you all have toured Domain 4, that’s one of the original vintage single-story buildings in the domain that sits directly on Rock Rose, the main retail and entertainment avenue within the domain and it’s arguably the best land site that we have in the domain.
And so it ultimately might be more valuable to us as land than trying to aggressively renew that space, at least for the long term. Perhaps a short-term lease would be in the cards, but it’s a terrific land site for us. Outside of that, the only other significant expiration that we have next year is NASCAR media, which is about 77,000 square feet that expires in the end of February next year. Again, we’ve talked about this many times in past quarters. NASCAR did a long-term renewal for some space at our 550 South project. This 77,000 is going to be relocated into a new facility that they’re building at the racetrack. And so this was originally scheduled to expire this year. They extended it into next year to line that up with the delivery of their new media center.
And so those are really it for next year.
Jay Poskitt: Great. Thanks. That’s all for me.
Colin Connolly: Yes.
Operator: Our next question will come from Upal Rana with KeyBanc. Please go ahead.
Upal Rana: Hi. Thank you for taking the question. So, you highlighted the realty tax savings in your prepared remarks. Can you maybe break that down by maybe markets where you’re seeing that? And maybe any potential other cost reduction plans that you’re working on that can help support cash flow either this year and next year?
