US lab, R&D space supply to peak in 2024; DigitalBridge finalizes transition

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The US life sciences property industry is facing higher overall vacancy and lower rents in 2024 as delivery of new lab and research and development (R&D) space will likely peak during the year, CBRE said in a report.

"It's unlikely there will be enough demand in 2024 for the nearly 38 million square feet of new lab and R&D space currently under construction," the real estate service firm said in its 2024 US Life Sciences Outlook report.

The overall vacancy rate in the three biggest lab and R&D markets in the US — Boston-Cambridge, San Francisco Bay Area and San Diego — is expected to head higher in 2024, from 10.1% in the third quarter of 2023 and 3.3% in the first quarter of 2022. Certain other primary markets may see more moderate increases in vacancy, according to the report.

Despite the surge of new supply in 2024, the modest uptick in venture capital funding may result in a slight rebound in leasing activity, CBRE said.

The construction pipeline will likely drop dramatically in 2025, which would allow property markets to stabilize.

CHART OF THE WEEK: US public REIT M&A activity down in 2023

⮞ M&A deals involving public real estate investment trusts had a combined transaction value of $39.81 billion across eight transactions, lower than the $81.86 billion deal value announced in 2022.

⮞ Of the eight deal agreements in 2023, six were all-stock transactions and two were all-cash.

⮞ Deals involving a public REIT buying or merging with another public REIT totaled $37.54 billion, significantly higher than $2.3 billion total for privatizations.

New path forward

– DigitalBridge Group Inc. said it no longer holds a controlling financial interest in Vantage SDC, completing the company's transition to a pure-play alternative asset manager focused on digital infrastructure. Vantage SDC comprises 13 hyperscale datacenters in North America and is managed by Vantage Data Centers.

– Vantage Data Centers secured a $6.4 billion equity investment led by investment vehicles managed by DigitalBridge and Silver Lake Technology Management LLC. Vantage Data Centers owns or controls 25 sites in North America and EMEA.

– Smith Douglas Homes Corp. raised $162 million from its IPO, Bloomberg News reported. The homebuilder offered 7.7 million shares priced at $21 per share, the higher limit of the marketed range. Smith Douglas shares will start trading on the NYSE on Jan. 11 under the ticker SDHC.

– Canada-based Morguard Corp. is divesting a 14-asset hotel portfolio for gross proceeds of C$410.0 million as part of the company's portfolio optimization plan. The transaction is expected to close in the first quarter.

Scale up

– Dallas-headquartered Landsea Homes Corp. agreed to acquire Antares Homes Ltd. for $232.2 million in cash. The transaction is expected to close in early February, subject to the satisfaction of customary closing conditions. Vestra Advisors LLC was financial adviser to Landsea Homes.

– Etude Capital and San Felipe Financing LLC launched Etude Storage Partners, a joint venture that will invest at least $500 million in North American self-storage properties. San Felipe committed $250 million of equity to the venture.

See key people moves in North America real estate.

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