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Cousins Properties Inc (NYSE:CUZ)
Q3 2020 Earnings Call
Oct 29, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Cousins Properties third quarter conference call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Pam Roper, General Counsel. Please go ahead.

Pamela F. Roper -- Executive VP, General Counsel & Corporate Secretary

Good morning, and welcome to Cousins Properties third quarter earnings conference call. With me today are Colin Connolly, our President and Chief Executive Officer; Richard Hickson, our Executive Vice President of Operations; and Gregg Adzema, our Chief Financial Officer. The press release and supplemental package were distributed yesterday afternoon as well as furnished on Form 8-K. In the supplemental package, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements.

If you did not receive a copy, these documents are available through the quarterly disclosures and supplemental SEC information links on the Investor Relations page of our website, cousins.com. Please be aware that certain matters discussed today may constitute forward-looking statements within the meaning of federal securities laws, and actual results may differ materially from these statements due to a variety of risks and uncertainties and other factors, including the risk factors set forth in our annual report on Form 10-K and our other SEC filings. In particular, there are significant risks and uncertainties related to the scope, severity and duration of the COVID-19 pandemic, along with the direct and indirect impacts that the pandemic and related mitigation efforts, including governmental requirements and private sector responses, may have on our financial condition and operating results and those of our customers. The company does not undertake any duty to update any forward-looking statements, whether as a result of new information, future events or otherwise. The full declaration regarding forward-looking statements is available in the supplemental package posted yesterday, and a detailed discussion of potential risks, including those posed by COVID-19, is contained in our filings with the SEC.

With that, I'll turn the call over to Colin Connolly.

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Thank you, Pam, and good morning, everyone. At Cousins, we firmly believe, if our dedicated employees provide excellent service for our customers, our company will drive strong results for shareholders. We have stayed true to this guiding principle even under the toughest circumstances. Over the past three quarters, I have been so proud that we have ably navigated a challenging COVID environment while providing our customers with the excellent service they expect from us every day and caring for the team. But before discussing our long-term outlook, I want to quickly highlight our third quarter results. We reported FFO of $0.69 per share. We collected 98% of total rent, including 99% from office customers. We leased 255,000 square feet with a weighted average lease term of over six years.

We increased second-generation cash rents by 9%. The office component of our 1.9 million-square-foot development pipeline is 82% leased. And lastly, we closed the quarter with net debt-to-EBITDA of 4.24 times and more than $1 billion of liquidity. In a normalized environment, these would be solid results. In a global pandemic, these are terrific results and reinforce the quality of our markets, our portfolio and our customers. While new leasing was slower during the quarter due to a summer spike in the Sunbelt COVID cases, since Labor Day, we have seen an encouraging uptick in leasing tours and discussions across our portfolio. In addition, economic development agencies in Atlanta, Austin, Charlotte, Dallas, Phoenix and Tampa are all active with potential prospects looking to redistribute employees out of the Northeast, Midwest and California. While the duration of COVID-19 is likely to impact the office market into 2021, the combination of both in-market and out-of-market activity gives us optimism for Sunbelt outperformance in the quarters to come. I'll now turn to the trends shaping the office business. In doing so, I believe it's critical to separate short-term trends and long-term trends. As I mentioned last quarter, many are continuing to speculate about the implications of work from home on the office sector. At Cousins, we have a unique vantage point on this topic as we have spent considerable time discussing the future of the office with our customers. Interestingly, the headlines, which are often driven by companies whose businesses benefit from a virtual world, are disconnected from what we hear on the ground in the Sunbelt from users of trophy office space. Let me share some of the feedback from our customers. First, they are not working at home by choice. It is out of necessity due to a global pandemic. Corporate leaders are increasingly worried about the erosion of corporate culture, productivity, employee loyalty and well-being over an extended period of remote work. Second, when it is safe, our customers are generally eager and enthusiastic to return to the office. Flexibility is likely to grow, but collaboration and mentorship drive long-term corporate success and are done best in person. Thus far, working from home has proved serviceable due to near-universal adoption of remote working in cities largely remaining in lockdown. Pandemics do end, however, and we believe this trend will likely prove to be temporary. If you want a glimpse into the future of office utilization in the United States market, look to leading international cities in Asia that have more effectively contained the virus and have largely returned to in-person work. At Cousins, we are constantly evaluating where the market is headed. Again, we look to our customers for feedback on how their office needs are changing. Let me share their perspective on the long-term trends that we believe will drive the office sector: first, corporate migration to the Sunbelt in search of a business-friendly climate, lower taxes, lower cost of living, and most importantly, a strong and diverse talent pool; second, a flight to quality with a greater focus on newer, more amenitized and more experiential properties; third, a decrease in office density to address health concerns and employee dissatisfaction with overly dense open floor plans. If these trends sound familiar, they are.

Many years ago, we crafted our strategic plan to position Cousins at the intersection of these trends. We prioritized a trophy Sunbelt portfolio, complemented by a best-in-class balance sheet and leading local operating platforms. We have made great progress on our strategic priorities. 100% of our properties are already located in the Sunbelt, 100% are Class A, and our portfolio is among the newest vintage in the office sector, with an average building age of 2002. While we do not anticipate a new paradigm post-COVID, we do believe these long-term trends will accelerate. And as our customers move faster, it is critical that we appropriately adapt our investment strategy to meet their changing office needs. As we identify attractive opportunities, we plan to recycle older, vintage, more capital-intensive assets into newer, more amenitized and less capital-intensive properties in the best locations. Fortunately, we have a platform that allows us to both buy existing assets that are consistent with the office of the future and to develop state-of-the-art properties for growing customers on our attractive land sites. We won't always be able to time our buys and sells concurrently, but to be sure, if you see us buy or sell, you can expect the other will likely follow.

Our financial strength affords us the flexibility to manage timing differences while maintaining a conservative financial profile. In short, we can keep the balance sheet strong and powder dry for larger strategic opportunities. Over time, we are confident that we can enhance our already unmatched trophy portfolio, reduce second-generation capex and generate attractive investment returns. Our Sunbelt markets are a clear tailwind. Our trophy assets, fortress balance sheet and creative team are differentiators. We will stay focused and disciplined on our compelling strategic plan. Before turning the call over to Richard, I want to thank the talented Cousins team, which continues to work diligently each day in all of our markets. I appreciate their dedication, customer service ethic and hard work.

I'm proud to be part of Cousins. Richard?

Richard G. Hickson -- Executive Vice President Operations

Thanks, Colin, and good morning, everyone. Following up on Colin's remarks, I'm happy to report that with continued hard work from our team and a best-in-class Sunbelt portfolio, we were able to deliver solid third quarter operating results. But before I move into operating results, I want to update you on general business conditions relative to the pandemic. First, an update on physical occupancy or utilization of our 19.4 million square foot portfolio by our customers. As you'll recall, from the first days of the pandemic through the summer, utilization of our properties was consistently well below 10%. Since Labor Day, however, we have seen a steady increase, with utilization currently at an average of 20% across the company. I would also note that some properties are operating at utilization of 50% or more.

The recent utilization trend is decidedly positive, but our sense is that utilization will not move materially higher from here until sometime in 2021. Once again, I am pleased to report that rent collections remain solid. We collected 98.2% of rent from all customers and 98.7% of rent from office customers in the third quarter. 100% of our top 20 customers paid rent this quarter. Additionally, September was our strongest collections month since the pandemic began, and October rent currently stands at 98% collected. As in prior quarters, these numbers reflect the impact of rent deferral agreements completed to date. With regard to rent deferral activity, in short, there is very little happening at this time. As a reminder, the total cash rent deferred in the second quarter was $7.5 million or 1.1% of annualized contractual gross rents. In the third quarter, we added 0.1% to this total, such that total cash rent deferred is now 1.2% of annualized contractual gross rents. As of today, what little deferral and restructuring activity that is going on is with retail and flexible office customers. Both of these customer segments represent a very small portion of our annual rental revenue.

Now on operating results. Our total portfolio ended the third quarter at 91.9% leased, with our same-property portfolio at a solid 93.6% leased. In addition, total portfolio and same-property portfolio weighted-average occupancy increased to 90.6% and 91.9%, respectively. In-place gross rents also increased again to a record $39.72 per square foot. We view these as fantastic headline portfolio statistics, especially in the current environment. As expected, the pandemic impacted our leasing volume in the third quarter. In all, we signed 255,000 square feet of leases, about half of our three year quarterly run rate. However, activity was only down 16% sequentially, showing the decline has slowed. Given the clear drop in new leasing demand, 23% of leases signed in the third quarter were new and expansion leases. This compares to a year-to-date level of 49% and a three year run rate of 58%. Despite lower volume and the unusual lease mix, the quality of our leasing activity held up very well. Average lease term was a healthy 6.1 years. And lease concessions, defined as free rent and tenant improvements, were only $2.80 per square foot per year, materially lower than our rolling 8-quarter average of $5.11. One item of note is that almost 1/4 of our leasing activity took place in our noncore markets of Fort Worth and Houston, almost all of which was one long-term renewal of a 49,000-square-foot customer at Burnett Plaza. This was a great renewal for the property and for Cousins. However, rental rates in Fort Worth are low relative to our other markets. As a result, our average net effective rent in the third quarter came in lower at $21.46. Excluding activity in our noncore markets, our average net effective rent was a higher $23.13, much more in step with our rolling 8-quarter average of $23.72. I'm also pleased to report that rent growth remained exceptionally strong with second-generation net rents increasing 8.9% on a cash basis.

Again, excluding our noncore markets, second-generation net rents increased 15.8% on a cash basis. This is strong rent growth either way you slice it. Given the unique time we are in, I also want to address our leasing pipeline. Looking forward, the size of our late-stage pipeline is screening quite a bit better than this time last quarter at about 60% larger. While not back to pre-pandemic levels, this stage of our pipeline is certainly signaling an encouraging trend. We also feel good about the vast majority of our late-stage pipeline converting to signed leases over the next couple of quarters. Our late-stage pipeline is also revealing a rebound in new and expansion leasing, currently representing 47% of total activity. Again, our three year run rate on this metric is less than 10 percentage points higher. Last but not least, cash net rent growth in the late-stage pipeline is consistent with the solid growth we've posted in our recent signed activity. In terms of earlier-stage activity, we have seen clear improvement in initial inquiries and tours in the past month or so.

As an illustration, one of our third-party leasing partners noted in an update last week that, "Medium-sized touring activity has definitely picked up, due in part to travel restrictions being lifted and people being able to fly into town for tours." This holds true in all of our core markets. We are also seeing a pickup in large and new-to-market searches. As of today, we are actively tracking or responding to one or more large user requirements, whether new-to-market or not, in every one of our core markets. Our market leaders are also consistently hearing from economic development groups that their teams are as busy today as they have ever been. These are encouraging signs that were not in play just a couple of months ago. Please keep in mind, though, that this kind of early stage activity does take time to evolve and even more so during a pandemic. Beyond demand, all eyes are clearly trained on sublease availability, and rightly so. Like many, we flagged this trend last quarter.

And similar to last quarter, we remain most focused on sublease supply in the CBD of Austin, which CoStar puts at 6.4% of Class A inventory at the end of the third quarter. We believe much of this new availability was space previously earmarked to accommodate robust hiring and that companies are now attempting to adjust for lower growth. More broadly, and not just as it relates to Austin, there's also some market speculation about how much of this new sublease supply represents tenants fishing for an easy or short-term income win but who are not necessarily highly motivated to transact. Only time and an eventual recovery will tell on that front. In general, we still view the amount of sublease space in our other target submarkets across the Sunbelt as noticeably elevated but manageable over time.

As we look forward, Cousins is incredibly well positioned with a truly phenomenal team, an unequaled trophy office portfolio with only 16.6% of contractual rents expiring in 2021 and 2022 and a fantastic Sunbelt footprint that should prove to be a great tailwind as we navigate and emerge from this pandemic. With that, I will hand the call over to Gregg.

Gregg D. Adzema -- Executive Vice President And Chief Financial Officer

Thanks, Richard. Good morning, everyone. I'll begin my remarks by providing a brief overview of our quarterly financial results and activities, including some detail on our same-property performance, our receivables data and our development pipeline, followed by a quick discussion of our balance sheet and dividend before closing my remarks with updated information on our outlook for the remainder of 2020. All things considered, third quarter numbers were solid and have held up relatively well since the onset of the pandemic. For a little perspective, third quarter FFO was down about 4% from last year. Year-to-date same-property cash NOI remains positive at 2.1%, and we've continued to roll up rents on a cash basis over 15% during the first nine months of 2020. Based on our recent share price performance, you might have been led to think that Sunbelt fundamentals have deteriorated much more severely than they actually have. Turning to our same-property performance.

Cash net operating income during the third quarter declined 3% compared to last year, which was consistent with my comments on last quarter's earnings call. This was driven by a 4.1% decline in revenues and a 5.8% decline in expenses. The largest item driving our same-property performance remains the fiscal occupancy within our buildings. As Richard discussed earlier, while still well below pre-COVID levels, physical occupancy did improve during the third quarter, and our parking income followed suit. After declining 30% during the second quarter, parking income fell 18.4% this quarter compared to last. Still not great, but improving. Excluding payment deferrals and parking income, same-property cash NOI increased 0.3% during the third quarter. Before moving on to our development pipeline, I wanted to touch on customer receivables. During the third quarter, FFO was reduced by approximately $475,000 due to a combination of rent write-offs and an increase in our allowance for uncollectible rents. This number is consistent with the same items from the first and the second quarters of this year and is not materially higher than our historic run rate.

And as a quick reminder, these numbers are tied to specific customers and leases. No general COVID-19 reserve has been taken. Turning to our development efforts. The current pipeline represents a total Cousins investment of $566 million in six assets. The first of these assets began generating net operating income last quarter, and all six will fully stabilize over the next 10 quarters, at which point, we anticipate they will generate approximately $53 million in annualized GAAP NOI. On the transaction front, we closed one acquisition during the third quarter, the purchase of a 1.7 acre land parcel adjacent to our existing domain properties in Austin through a 90-10 joint venture for $11 million. While a relatively small transaction, this is a very strategic site that builds upon our already significant inventory of land and domain that should drive future growth in Austin for years. Looking at potential future transactions. Although we haven't received formal notice yet, we believe Dimensional Fund Advisors will likely exercise their option to purchase our interest in their regional headquarters building in Charlotte during the first half of 2021. As a quick reminder, we developed this property in a 50-50 joint venture with DFA, who occupies 100% of the office space. The basic terms of this joint venture are outlined in our financial supplement, as are all the terms of our joint ventures. Overall, the joint venture with DFA is highly structured and very similar to the arrangement we had with them when we developed their corporate headquarters building in Austin several years ago.

As part of the agreement, they have the option to buy us out two years after completion, and the purchase price is not directly tied to current market value. It's calculated based on a spread against the going-in yield on our original cash investment, which was $46 million and only covered base building costs. DFA paid for all tenant improvements. And per GAAP, DFA's costs are being amortized through revenues over the term of the lease. Bottom line, we developed Dimensional Place to an 8.25% yield, and we'll likely sell it to DFA at a 6.5% yield or 175 basis points spread. If this sale occurs, it will be terrific for our shareholders. Turning to the balance sheet. We entered this period of volatility with outstanding financial strength, among the very best among our office peers. Not only do we have low leverage at 4.24 times net debt-to-EBITDA, our liquidity position of over $1 billion at the end of the quarter is more than enough to fund the remaining $136 million necessary to complete our development pipeline. Our dividend also remains well covered and very safe, supported by a low 65% FAD payout ratio. Looking forward, our 2020 outlook remains in line with the information we gave in our previous two earnings calls, importantly, the assumptions addressing the metrics both you and we currently most focus on. Spec leasing, rent deferrals, parking income remain within the ranges we previously provided. At the corporate level, we continue to take a hard look at our general and administrative expenses. Prior to COVID, our G&A load was already exceptionally low, and we have taken steps to reduce it even further. Our current 2020 forecast assumes corporate G&A expenses, net of capitalized salaries, of between $25.5 million and $27.5 million. This is down $1.5 million from the range we provided last quarter and is down $7.5 million or 22% from the original range we provided at the beginning of 2020. On both an absolute basis and as a percentage of enterprise value, this range represents exceptionally low cost to our shareholders and is among the very best within the office sector.

With that, let me turn the call back over to the operator for your questions.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Blaine Heck of Wells Fargo. Please go ahead.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Alright, thanks. Good morning. Can you guys just discuss the interest in the Bank of America space in Charlotte? I think you guys had around 40,000 square feet come out this quarter and another 200,000 or so at the end of the year. I guess, based on any interest you have there, do you have any sense of how long should we expect the backfill to take? And maybe how many tenants do you envision taking that space?

Richard G. Hickson -- Executive Vice President Operations

Sure, Blaine. Good morning. This is Richard. I'll start off with this one. BofA, we've had decent interest. As the activity in our pipeline has picked up, we have also seen some activity pick up there. So we did sign one deal for a partial floor at BofA Plaza in the third quarter, which was encouraging. And say, we have one full floor candidate in the pipeline right now. That looks encouraging. We've had tours for as much as a 5-floor candidate recently. So I think the mix there, ultimately, as we restat vacancy up, is going to be pretty broad-based. I think we should, over time, find that we'll be able to find a larger user, at least one, and then we'll probably multi-tenant some number of floors. So, at this point, it's early. We do -- you're right. We got 47,000 square feet back this past quarter, and we'll get the bulk or the balance of the giveback at the end of this year. And we look forward to leasing it up over the next year, maybe a little more, subject to the pandemic.

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Blaine, I'll just add -- it's Colin, that, again, as we look at the -- as you look at the Charlotte market, I think we are very encouraged that in terms of some of the, ultimately, relocation opportunities out of the Northeast into a market like Charlotte, and BofA is positioned as one of the kind of unique large blocks of space that could accommodate a user looking to move into the market.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Yes. That's helpful. Thanks, guys. And then the second question, with the news that Parsley Energy is going to be acquired by Pioneer, have you guys had any recent discussion with them, Parsley, about their space needs and maybe on the interest in subletting any additional space?

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Blaine, it's Colin. And first, I'd just start off by saying, Parsley has been a just a terrific relationship and partner for Cousins, and they certainly should be proud of the execution that they've had at Parsley and the value that they've delivered for shareholders. And we've got great relationships with their team there. We have been in contact with them. It's obviously very preliminary in their merger process with Pioneer. I think that being said, I think the Parsley team will be strong advocates for keeping some presence in the Austin market given their success of recruiting engineering talent into that market. But I think time will tell on that. It is interesting, as that announcement has been made, we have received some reverse inquiries as to will there be opportunity to take some of that space, whether sublease or direct. But again, that's all very preliminary. But again, I think encouraging, right, as we think about build-to-suit set at Cousins, we are always focused on high-quality assets and great locations that will have interest and usability for many tenants, multi-tenants. And I think we feel really good about our hand at that particular project.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Okay. That's good to hear. Lastly, you guys have a very strong balance sheet. You guys have leverage below that of peers. Can you talk about the investment sales market, what you're seeing there and whether you guys are actively out there kind of looking for acquisitions? And if so, what types of assets are on the market? Are you seeing only core buildings? Or is there value-add? And which way would you guys look for?

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Blaine, great question. And as you mentioned, we've put our balance sheet together and created one that's both strong and has liquidity for unique environments and opportunities in the market. And I think, clearly, we're likely to see opportunities coming out of the current disruption in the market. That being said, we are starting to see some assets come out into the market and confidence in the investment sales market, and particularly, in these kind of best urban submarkets of Sunbelt. And I think we're going to see a diverse set of opportunities. I think you'll see some traditional, kind of Cousins value-add acquisition opportunities. I think we'll also see some opportunities to perhaps take advantage of some situations to acquire kind of what I'd characterize as core but strategic existing buildings that we could perhaps pair with some adjacent land in the combination to create really attractive value-add type returns. And I think as we get later into 2021 -- we are already having some discussions with folks kind of '22 starts, '23 starts -- or excuse me, occupancies that are interested in new development, and in particular, companies that are looking to relocate, wanting to create and control their own environment. So even if office market conditions do deteriorate further, we do think there'll be continued interest in some new development as the market and the world opens back up. So a broad set of opportunities, and we've got, again, the balance sheet to take advantage of those.

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

Great. Thank you guys.

Operator

[Operator Instructions] The next question comes from Dave Rodgers with Baird. Please go ahead.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

Yes. Good morning everybody. Maybe, Richard, to follow-up on Blaine's comment with BofA. Maybe talk about the other two big spaces you have, Norfolk Southern and Anthem. And I mean, do you really look at those as more of an opportunity because you have those larger blocks of space? And I guess, with tenants maybe wanting to spread out a little bit more, are you getting more or less interest in those spaces as people think about those coming available?

Richard G. Hickson -- Executive Vice President Operations

Yes. Dave, it's a good question. And I think there's -- it's a little early to tell at this point whether people are going to be explicitly asking for more space. We think that's where it's probably headed from a de-densification standpoint. But again, I mean, I'd say the activity on the spaces that we had in Atlanta, both at 1200 Peachtree and at 3350 Peachtree, the interest is fairly similar to what it has been. And it would -- I would say that there are multiple groups that have been through the buildings recently. And we feel good about the activity given where we are in the overall macro environment.

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Yes. Dave, I'd just add again, both of those buildings are great locations and good amenities that have had capital reinvested into those. And so -- and in markets that don't have a lot of speculative space under way. And so we do feel optimistic, again, as the world begins to open up and we start to see more leasing activity, that we can continue to take advantage of opportunities. We certainly like our bases in both of those buildings. Certainly, Bank of America and the Anthem lease here in Atlanta, both of those leases are well below market with kind of the expiring rents in the mid-teens on a triple net basis. So we feel like we've got the opportunity, again, to drive value, grow the rents even in a softer market. So we're encouraged.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

Thanks for that. I think with regard to utilization, you guys talked about maybe roughly 20% since Labor Day. You did mention maybe some assets up as high as 50%. Maybe that was one or maybe a small handful. But can you give us a sense for the utilization differences maybe by market or by asset type? Most of the -- and most of your assets, I know, are kind of high-rise CBD. But are you seeing meaningful difference? And what drives that kind of 50% number? Is that just a tenant requirement to be in the office or a certain industry?

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Dave, it's a great question. And I'd say we do see some, although small, variation by market. As an example, Dallas seems to be ahead of some of the other markets, Tampa as well, kind of generally speaking, in the market. But I'd say those variations are smaller around the average. What really is the larger differentiator is the underlying customer base within that particular building. And we are seeing, for the most part, kind of larger national and international companies perhaps taking a more cautious approach. Perhaps they have a footprint across multiple markets and so have kind of single -- perhaps single mandate, single guidelines. Whereas some of our smaller kind of regional and local companies have, I'd say, more kind of local autonomy and local decision-making based on the specific factors in that particular market. And that's where we're seeing, again, some of the, I'd say, the bigger differentiation and -- in certain buildings upwards of 50%.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

Okay. That makes sense. And I guess, maybe lastly, just in terms of the prospect list you talked about and even dovetailing into Gregg's parking comment. I guess, I -- I think what you were saying is that all of that's getting better, right? Prospect lift is better at the end of the third quarter than the second quarter and that parking was better in the third quarter than the second quarter. But I wanted to verify that it wasn't just getting worse at a lower rate, one; and then two, maybe, Richard, are you able to put some numbers around that to kind of put that in perspective of per square foot or square foot numbers relative to maybe where you were a year ago or where you'd traditionally be at this point?

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Well, I'll kind of start at a high level and maybe kind of follow-up with you in terms of some of the specifics that you're looking for. But again, I would characterize, right, we want to be clear, we're certainly not at kind of pre-pandemic levels. But at the same time, we are seeing improvement. And that's not just kind of a deceleration of the negative. It's actually an increase in our deal pipeline, our existing leasing pipeline as well as, again, the parking numbers in the third quarter were sequentially higher than the second quarter, again, driven by a slight uptick in the utilization. And we think that uptick will continue. Although, as Richard indicated, I don't think we'll see a material change in utilization until we get into next year, and again, I think, until you see some of the, hopefully, near-term announcements as it relates to breakthroughs on the therapeutic and vaccine front. In terms of specifics, Dave, again, if you could clarify perhaps maybe some of the metrics you were looking for.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

I think from a high level, you captured what I was looking for. I guess, maybe the one metric, if Richard has any numbers to put around kind of the leasing, the pipeline from an absolute perspective and how you guys think about that even at a high level, at the corporate level versus last year at this time versus 2Q when you reported, if you have any of that. And if not, we can follow up off-line.

Richard G. Hickson -- Executive Vice President Operations

Yes. So, in terms of just numbers, again, it's -- the pipeline at this time last quarter relative to the pipeline today is 60% higher. So it's roughly, I'd say, rough math, 125,000, 150,000 feet higher than this time last quarter. And the metrics, I would say, there's -- without putting numbers around it, I'd say that the metrics are much more consistent within our late-stage pipeline, where we have the best visibility into that with activity prior to the pandemic. It's not quite there. There's still some differences, but it's normalizing and on its way to normalizing. I don't know if that helps answer the question.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

Yes, that does. That's what I was looking for. So, thank you all.

Richard G. Hickson -- Executive Vice President Operations

Great.

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

And Dave, that will take, again, a few more quarters for that to kind of fully normalize. But again, I think the uptick has been encouraging. And again, it's been -- we're seeing it in all of our different markets in the Sunbelt. And there's, again, some in-market activity and some out-of-market activity. And so again, we'll continue to watch the virus and how that interplays, but it seems to be trending in a positive direction.

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

Very helpful, thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Colin Connolly for any closing remarks.

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Well, again, I want to thank you all for joining our third quarter conference call this morning. And I will look forward to hopefully seeing many of you at NAREIT. And again, we appreciate your continued interest in Cousins Properties.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Pamela F. Roper -- Executive VP, General Counsel & Corporate Secretary

M. Colin Connolly -- President And Chief Executive Officer Of Cousins Properties

Richard G. Hickson -- Executive Vice President Operations

Gregg D. Adzema -- Executive Vice President And Chief Financial Officer

Blaine Matthew Heck -- Wells Fargo Securities -- Analyst

David Bryan Rodgers -- Robert W. Baird & Co. -- Analyst

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