 e are proud of our accomplishments in 2005-a year of solid performance. Operationally, we maintained our leading position, strengthened our portfolio in our core markets, and positioned ourselves for accelerated growth as cyclical market dynamics change. From a financial perspective, we continued to deliver consistent dividends to our shareholders, successfully accessed the capital markets, improved our balance sheet, and demonstrated the stability and conservative management for which we are known.
All this occurred against an economic backdrop that was, as we anticipated, disappointing. The cautious demeanor of large sectors of the nation's business community continued to constrain demand for office space in 2005. Corporate revenue and earnings growth was not robust enough to overcome the reluctance many businesses have had in recent years to make long-term commitments. We did not see the surge in employment that would be necessary to reinvigorate the demand picture. As a result, the market for office space is highly competitive, with downward pressure on rents continuing and increased expectations from tenants for concessions and incentives.
While not immune from these conditions, Mack-Cali was able to make significant progress on many fronts despite them. The characteristics of our core markets –the Northeast and Mid-Atlantic regions– worked to our advantage, as their diverse macro economies and tighter inventories of office properties helped them avoid the extreme downturns that some other markets around the country suffered. |
Mack-Cali's position, presence and prestige within these markets helped us outperform our competitors and achieve a number of notable accomplishments.
Achievements in Leasing
By reaching out to a diverse and high-quality tenant base, Mack-Cali managed a very active year of leasing with over 5.6 million square feet of transactions, exceeding 2005's volume by 14%. Smaller tenants are having a larger impact on the demand equation as they take advantage of the soft market to move up to better class A space, and Mack-Cali has benefited from this "flight to quality." Major renewals also played a significant role in 2005 – the excellent relationships we have with large corporate tenants were underscored by leases with IBM (292,000 square feet in two buildings in Westchester County, N.Y.), Cingular Wireless (two renewals in Paramus, N.J., and a new lease in Parsippany, N.J., totaling 456,000 square feet) and Casio, Inc. (96,000 square feet in Little Ferry, N.J.).
There were also new leases that demonstrated our ability to attract those large deals that did emerge in 2005, each of which required the creativity, reach and resources that Mack-Cali can bring to bear in meeting users' space requirements. For Vonage, as an example, we acquired and then leased to the company for its headquarters an entire 350,000 square-foot building. QualCare was attracted to a 99,500 square-foot lease in one of the buildings we acquired from AT&T last year.
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