Vacant life sciences space up in Q2 2023; Public Storage to buy Simply Storage

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The average vacancy rate for laboratory and research and development space across the top 13 US life sciences markets stood at 9% in the second quarter, up more than four percentage points from a year earlier and more than two percentage points higher than the previous quarter, according to a report from CBRE Group Inc.

The sharp rise in vacancy was partly due to the addition of 3.4 million square feet of new space in the second quarter, 45% of which were preleased.

Even with the vacancy rate rising and negative net absorption exceeding 1 million square feet, the average asking rent reached a record $66.31 per square foot during the second quarter. CBRE attributed the increase to the addition of new top-quality supply to the market.

Boston-Cambridge, San Francisco Bay Area and San Diego — the largest life sciences real estate markets in the US — had a combined 1.5 million square feet of negative net absorption in the second quarter, CBRE said.

CHART OF THE WEEK: US REIT capital offerings up YOY in June

⮞ Equity real estate investment trusts in the US raised $5.71 billion through capital offerings in June, up 17% year over year although down 23% from a month earlier.

⮞ A chunk of the capital raised during the month was from senior debt offerings, at $4.80 billion.

⮞ Industrial REIT Prologis Inc. secured the most capital in June after selling $2 billion worth of notes.

Acquisitions

– Public Storage agreed to acquire Simply Storage Management LLC, or Simply Self Storage, from Blackstone Real Estate Income Trust Inc. for $2.2 billion. The transaction involves 127 100%-owned properties spanning 9 million net rentable square feet across 18 US states. The deal is expected to close during the third quarter.

– Rexford Industrial Realty Inc. expanded its portfolio with the acquisition of the industrial property at 9400 Santa Fe Springs Road in Santa Fe Springs, Calif. The 595,304-square-foot building is fully leased and was acquired for $210 million.

– The Broe Group's real estate division paid $225 million to buy the Seasons of Cherry Creek, a multifamily community at 3498 E. Ellsworth Ave. in Denver, from an entity affiliated with RedPeak Properties LLC, the Denver Business Journal reported.

Portfolio pruning

– Steve Hermann Hotels sold the 85-room The Inn at Rancho Santa Fe luxury resort hotel in north San Diego County for $100 million, Commercial Observer reported. An unnamed institutional investment fund acquired the property at 5951 Linea Del Cielo.

- Alliance HP LLC handed back the ownership of the Triangle Plaza office complex in Chicago to lender Värde Partners Inc. despite the property's high occupancy rate of 92%, CoStar reported. The transaction reflects uncertainty in the office sector due to continuing low demand and rising interest rates, among other factors, the report said.

See key people moves in North America real estate.

Canadian REIT capital offerings fall more than 50% YOY in Q2 2023

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