If you have been following Piedmont Realty Trust (PDM), recent news around its third quarter leasing activity may have caught your attention. The company just announced it locked in over 500,000 square feet of new leases, and more than 400,000 square feet were signed by new tenants. What stands out is that approximately 85% of these leases filled previously vacant space, making a noticeable dent in vacancy rates and putting more of Piedmont’s out-of-service portfolio back to work. With management calling out strong client demand and a robust pipeline, these operational wins have put fresh momentum behind the stock and placed Piedmont in the spotlight at a major real estate conference this week. Looking at the bigger picture, this latest update caps a stretch of renewed activity and changing investor sentiment for Piedmont Realty Trust. The company has recorded leasing totals of more than 1.5 million square feet so far this year, and management says they are tracking toward a full-year leasing goal of 2.2 to 2.4 million square feet. Still, the stock’s year-to-date return is down 2%, with a trailing 12-month result of -8%. However, gains over the past month and quarter show signs of a rebound and indicate that some investors see the recent news as a potential inflection point. The question investors now face is straightforward: does the recent momentum and upturn in leasing set up PDM as an undervalued play, or is the market already factoring in a brighter outlook?

Most Popular Narrative: 2.1% Overvalued

The current narrative views Piedmont Realty Trust as slightly overvalued, with the stock trading just above what analysts see as its fair value. Expectations for moderate growth and improved profitability drive this assessment.

The "flight to quality" trend is accelerating, with large, creditworthy tenants moving into best-in-class buildings. Piedmont's execution of several full-floor and large leases, often at record or above-market rents, is expected to significantly lift portfolio occupancy and revenue as these leases commence in late 2025 and 2026.

What happens when market optimism meets bold projections for revenue growth, profit margin expansion, and future lease-up rates? One quantitative assumption stands at the center of this value story. The real kicker lies in how future expectations are being discounted today. Want the full valuation playbook, including the numbers and hurdles needed for this fair value call? The narrative reveals all.

Result: Fair Value of $8.67 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks such as delayed lease commencements and persistent high office vacancies could quickly challenge the current optimism and threaten earnings momentum.

Find out about the key risks to this Piedmont Realty Trust narrative.

Another View: Discounted Cash Flow Tells a Different Story

While the market and analysts see Piedmont Realty Trust as slightly overvalued based on current expectations, our DCF model comes to the opposite conclusion and suggests the shares may actually be trading at a steep discount. Which narrative will prove true as new data emerges?

Stay updated when valuation signals shift by adding Piedmont Realty Trust to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Piedmont Realty Trust Narrative

If you see the story differently or want a hands-on look at the data, you can shape your own perspective in just a few minutes. Do it your way.

A great starting point for your Piedmont Realty Trust research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.