Joel Marcus and John Cunningham
Executive Chairman and Founder; Executive VP and Regional Market Director for New York City at Alexandria Real Estate Equities
Last year's rank: 44
Alexandria is the top dog of life sciences real estate in the United States.
Although growth has slowed from a record-breaking 2021, demand for labs and research & development space is still on the rise. Indeed, the national average vacancy of 6.7 percent in the first quarter marked an annual increase of 170 basis points, but is still below the 7.7 percent average in the first quarter of 2020 before the pandemic, according to CBRE.
At the same time, U.S. life sciences employment increased by 3.5 percent in February from a year earlier, exceeding the overall job-growth rate of 2.9 percent. Average rental rates increased by 3.2 percent from the fourth quarter to a record $65.62 per square foot in the first, and developers had more than 40 million square feet of lab space under construction in the top 13 markets in the first quarter, with 25 percent of it pre-leased.
After the end of the first quarter this year, Alexandria reported higher revenues and strong tenant demand, securing more than 1 million square feet in leasing for the 12th consecutive quarter. Also, the company raised rents 48.3 percent, which is the highest rate of growth in its 29-year history.
Alexandria’s executives say the industry is very strong, and very much in need.
“We have 10,000 known diseases wreaking havoc on human beings each and every day, and the personal and economic cost of sickness, illness and, today, the mental health crisis is continuing to skyrocket,” said Joel Marcus during the firm’s first-quarter earnings call. “Continued innovation in medicine is an absolute national priority, and the transformative work of our tenants in the industry is critical to addressing the massive unmet medical need.”
Alexandria delivered 453,511 square feet in five projects in the first quarter, and the projects’ combined annual net operating income totals $23 million. That includes a 50,200-square-foot development in Conejo Valley in Southern California as well as 56,000 square feet in the San Francisco Peninsula. Alexandria’s pipeline totals 7.6 million square feet, which is already 74 percent leased or under negotiation.
Alexandria said it serves more than 850 tenants, and in 2023’s first quarter reported $5.3 billion of liquidity with no debt maturities prior to 2025.
