EastGroup Properties (EGP) Citi’s 30th Annual Global Property CEO Conference 2025 summary

Company overview and strategy

• Operates as a shallow bay, last-mile industrial owner and developer in high-growth U.S. markets, focusing on the "Smile states" with a long-standing presence in these regions.

• Senior leadership team has significant tenure, providing stability and experience through various economic cycles and market disruptions.

• Maintains a strong track record of industrial returns, consistently ranking among the top performers in the sector over multiple timeframes.

• Focuses on smaller tenants and buildings, with 88% of rents from tenants under 150,000 sq ft and an average tenant size of 35,000 sq ft.

• Adheres to a strategy of being close to end consumers in fast-growing metro areas, avoiding volatile port markets.

Market conditions and leasing trends

• Current vacancy rate is 3%, with 97.1% leased; national vacancy for similar spaces is 4%, and supply is at an eight-year low.

• Leasing activity surged post-election, with the most productive quarter in company history and continued momentum into the new year.

• Recent backfill of a 300,000 sq ft Charlotte property with Conn's at a 20% gap rental rate growth, accelerating the original leasing schedule.

• Florida and Atlanta markets show strong leasing activity, with multiple renewals, expansions, and new development leases signed or pending.

• Development leasing is expected to continue, with a third historically coming from tenant expansions.

Supply, competition, and development outlook

• Supply of shallow bay industrial space remains limited as many peers and local developers have been sidelined, giving a competitive advantage for new starts.

• Construction costs have decreased by 10%-15% due to reduced new starts and increased competition among subcontractors.

• Land prices remain sticky, but low supply is expected to drive rents higher; labor cost pressures are not yet significant.

• The company is positioned to be among the first to restart development as the market recovers, with a multi-phase approach to building out parks and campuses.

• Acquisition opportunities have diminished as cap rates compress, shifting focus to development with higher yield targets.