Alexandria Real Estate Equities CEO Says Demand at 20-Year High

Joel Marcus, chairman, CEO and founder of Alexandria Real Estate Equities (NYSE: ARE), joined REIT.com for a CEO Spotlight video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.

Alexandria focuses on developing state-of-the-art real estate for the life science and technology industries. Its properties are clustered in urban campuses with close proximity to leading academic and research institutions. The company is active in the San Francisco Bay Area, Boston, San Diego, New York City and Seattle markets, among others.

Marcus discussed the current level of activity in the life sciences industry.

“In the 20 years since we invented this niche, this is the strongest demand cycle we’ve ever seen. It’s different from past cycles because it’s made up of both cyclical and structural reasons,” Marcus said.

On the structural side, demand has been fueled by the advent of a new generation of precision medicines, Marcus said. At the same time, the Food and Drug Administration has been approving safe and effective drugs at an all-time high rate.

In terms of cyclical factors, healthy capital markets in the sector are creating “insatiable demand, more than actually even exists in most of the markets today,” Marcus noted.

While Alexandria has been a pioneer in the life sciences real estate sphere, the company has also started to expand into the broader technology real estate sector. Marcus said the two industries coexist well within the portfolio. He pointed out that Alexandria’s exposure to the tech sector dates back to the late 1990s, when the company designed Google Inc.’s first campus. Since then, the company’s specialty has been developing “urban innovation campuses” in coastal cities.

“With those locations, you find a strong demand from the life science sector, but equally you now have the tech sector wanting to be in those very same locations. We have the great benefit of taking advantage of those two rather large demand segments,” Marcus said.

Meanwhile, Marcus said the latest design trends in the life science and tech sectors incorporate the concepts of openness, innovation and collaboration. Notably influenced by the millennial generation, properties have numerous amenities, including fitness and food facilities, Marcus added.