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The year 2004 was a notable one for Mack-Cali, as we marked our tenth year as a public company. Thank you to our shareholders, directors, employees and partners who have all supported our Company and have helped Mack-Cali become one of the country's leading real estate investment trusts (REITs).
Our Company's growth over our first decade has been considerable -- from 13 properties to 269; from 2.2 million square feet of space to over 30 million; from under $300 million in total market capitalization to over $5 billion today. But throughout this expansion, Mack-Cali has remained focused over the years on our core purpose of providing tenants with superior work environments. By pursuing this mission, we've developed an impressive tenant roster, a deep presence in core Northeast markets, and a strong financial position.
In 2004, we reinforced our strengths by increasing our investments in properties in core markets and reducing holdings in non-strategic markets; maintaining strong occupancies despite challenging real estate markets; enhancing
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our balance sheet through strategic financing; and capitalizing on opportunities that better position our Company for the future.
SUCCEEDING IN
CHALLENGING TIMES
While the nation's economy has started to show signs of recovery, there has yet to be meaningful business expansion and employment growth, which are the key drivers of office space demand. Businesses continue to defer their expansion decisions -- waiting for a clear, sustained economic recovery -- and real estate markets are still being impacted by the effects of corporate mergers and downsizings. As a result, markets remain competitive, with pressures on rents and capital spending for tenant improvements.
In what was the fourth year of a sluggish economy and weak demand, our occupancies dipped slightly in 2004 -- to 91.2% leased at year-end from last year's 91.5%. Several factors helped us sustain relatively strong occupancies: a particularly active year of leasing, with almost 5 million square feet of space leased; our
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proactive early lease renewal program, which reduced our exposure during recent down cycles; and a "flight to quality" in which smaller space users benefited from soft market conditions to upgrade their office space to premier Mack-Cali buildings.
Mack-Cali's strategy of operating in high-barrier-to-entry markets in the Northeast and Mid-Atlantic regions has helped to buffer us from greater occupancy losses. Most of our markets -- which span from Washington, D.C., up through Connecticut -- have diverse macro economies and limited inventory of new class A office space, allowing them to outperform most other real estate markets throughout the country.
BUILDING DEPTH IN KEY MARKETS
In 2004, we continued to build upon our strength in the Northeast. We invested over $250 million to acquire 14 office buildings totaling over 2.4 million square feet, plus developable land, and contracted to acquire a trophy property on the Jersey City waterfront.
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