PC: Realtors Association of Maui

Maui’s median sales price for single family homes sold in September rose to $1,025,000, up 3.0% from the year prior, according to the latest data released by the Realtors Association of Maui.

As the median increased, RAM reports the average sales price decreased to $1,465,982, down 4.8%.

Overall inventory of single homes for sale ended the month at 249, up 7.8% from September 2021, boosting the month’s inventory by 45% compared to the same time last year, according to RAM.

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Maui County’s real estate market in September continued its slowdown with the number of closed and pending sales declining while inventory and days on the market increased, according to the report. RAM reports the number of home sales fell 50.4% with just 57 closings last month.

In the condominium market, the median sales price was $800,000, up 9.7% from the year before; and sales in September totaled 97, down 46.7% from the year prior when 182 sales were reported, according to RAM.

“On the national level, the US real estate market continues to slow as we move into fall, as rising consumer prices and higher mortgage interest rates squeeze homebuyer budgets and cool activity,” according tot eh RAM report. “With inflation showing little sign of abating, the Federal Reserve implemented another 75-basis-point hike in September, marking the third such rate increase this year. The cost of borrowing has reached multi-year highs on everything from credit cards to auto loans in 2022 as mortgage interest rates topped 6% for the first time since 2008, causing existing home sales to decline for the seventh consecutive month.”

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RAM notes that affordability challenges have “priced many buyers out of the market this year,” and buyers who do succeed in purchasing a home are finding that the costs of homeownership have increased significantly. RAM notes that monthly mortgage payments are more than 55% higher than a year ago, according to the National Association of REALTORS®.

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One of the strongest economic sectors in the United States at the beginning of the pandemic was the housing market but, just like all other sectors, it appears that it’s now slowing down.

The signs that this is the case have caused increased concern for those who were planning on investing in real estate.

More precisely, the looming threat of another recession, increased rates as well as the Federal Reserve’s announcement about more hikes, have led to buyers but also builders to press pause on their plans and projects.

Investors seem to be looking to short the market as well, fearing that another housing crash like the one in 2008 would once again take place.

Sure enough, reports say that the one who predicted the initial housing crash at the time, Michael Burry, tweeted back in July that the housing market is in “free fall.”

Housing market in free fall.

Most people don’t know you can short the housing market with ETFs but you can.

— Michael Burry Stock Tracker ♟ (@burrytracker) July 20, 2022

Burry also supposedly advised Investors to short it. But what does that mean and how can it be done?

One way to short the United States housing market is through inverse exchange-traded funds [ETF], which can provide short exposure to securities tracked by Dow Jones U.S. Real Estate Index or MSCI US IMI Real Estate Index.

The Real Estate Index [REI] is an inverse ETF, designed to “track the performance of real estate investment trusts” but also of different companies investing in real estate directly.

Year to date REK is currently up more than 17 percent with short trends and long term ones staying positive.

According to Finbold, after the home builder stocks drop, less demand appears to be leading the housing market into a downturn.

As a result, treasury yields and borrowing costs are rising for end consumers which seems to be creating a vicious cycle for the housing market in general.

Furthermore, inverse ETFs can perform really well in a bear market as well but at the same time, the overall risk if much bigger when compared to non-inverse ETFs.

The reason is that the former use complex financial instruments such as derivatives and index swaps in order to ensure that short exposure is provided.

In conclusion, inverse ETFs should do quite well if the housing market continues to decline but investors wishing to get short exposure should keep in mind that there is still a risk involved, the results being quite unstable.

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This article is part of Risk.net’s series of crowd-sourced scenario-generation exercises. Click here to download a PDF of the full results.

You only find out who has been swimming naked when the tide goes out, as the old saying has it. For the past decade, central banks held rates down, encouraging some participants to throw caution to the winds. With the flood of cheap money now finally receding, investors are finding out which asset classes are most exposed to rising US interest rates.

There

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According to a recent report from Realtor.com, the real estate markets of Austin, Raleigh, Las Vegas, Phoenix and Charlotte slowed have down the most over the past year. In all five of these metro areas, the typical time it takes to sell a home increased significantly in 2022.

Looking forward, housing markets like Austin, Raleigh and Las Vegas could experience the biggest slowdown in 2023 as well. These, and many other metro areas across the country, are cooling rapidly after nearly two years of overheated conditions.

A ‘Slower’ Housing Market Likely in 2023

A few days ago, the research team from Realtor.com published its “September Housing Report” with data for the nation’s 50 largest metro areas. Among other things, this report showed that it’s taking longer to sell a home these days, compared to a year ago.

And that’s not surprising, when you consider all of the headwinds working against the real estate market in 2022. Spiking mortgage rates. Higher home prices. General inflation. These trends have made many would-be home buyers wary about (or incapable of) making a purchase.

So it’s no surprise to see a slowdown in the pace of sales nationwide. And that’s exactly what this latest report revealed.

According to the September 2022 Realtor.com report:

“The typical U.S. home spent 50 days on the market in September, up seven days year-over-year compared to an annual increase of four days in August, which marked the first increase since the early days of COVID.”

Those are national statistics. When we drill down to the city and metro level, we find that some housing markets have slowed down a lot more. Austin, Raleigh, Las Vegas and Phoenix are among the most rapidly cooling real estate markets in the U.S., as of fall 2022.

Biggest Slowdowns: Austin, Raleigh, Vegas and Phoenix

Over the past year, the five metro areas listed below experienced the biggest increase in “time on market.” That means they’re experiencing the biggest housing market slowdown, when measured among the nation’s major metro areas.

Metro Area	Median Days on Market	Median DOM Change, Y-Y (Days)
Austin-Round Rock, Texas	51	23
Raleigh, N.C.	43	23
Las Vegas-Henderson-Paradise, Nev.	48	17
Phoenix-Mesa-Scottsdale, Ariz.	47	17
Charlotte-Concord-Gastonia, N.C.-S.C.	43	14

The middle column shows the median number of days that homes stayed on the market, based on Realtor.com’s data. The column on the right shows how much that timeframe has increased over the past 12 months, in number of days.

Austin, Texas stood out in two ways. It had one of the highest “median days on market” among the 50 biggest U.S. metros, as well as the biggest increase in time on market. In other words, a major cooldown in real estate activity has turned Austin into one of the “slowest” real estate markets in the country.

Raleigh, Las Vegas, Phoenix and Charlotte rounded out the top five, in terms of the biggest increase in number of days on market.

What These Five Markets Have in Common

The five real estate markets shown above, and others like them, actually have several things in common. Over the past two years, all five of these metro areas experienced the following trends:

• A massive influx of buyers during the early days of COVID (2020).
• A sharp decline in housing inventory during 2020 and 2021.
• Skyrocketing home prices due to the above trends.

The above changes accelerated these housing markets like never before, leading to an unprecedented level of competition among buyers. Now, however, real estate markets like Austin, Las Vegas and Phoenix have very different trends in common:

• They’re all experiencing major inventory growth.
• They’re seeing a steady increase in the number of price reductions.
• They’re slowing down steadily, with homes taking much longer to sell.

In all five of the housing markets above, the total number of property listings increased by more than 50% over the past year.

Austin, Phoenix and Raleigh had the biggest increase in real estate listings, year over year. In fact, those three housing markets experienced triple-digit increases in the number of active property listings. Phoenix led the pack with a whopping 167% increase in listings, compared to a year ago.

These metro areas have also experienced an increase in the number of price reductions by sellers. A “price reduction” occurs when a seller lists a home for one price, only to reduce it at a later date. Usually, homeowners reduce their asking prices due to a lack of buyer demand and offers.

According to Realtor.com’s September Housing Report:

“Western metros posted the biggest gains in the share of listings with price reductions, led by Phoenix (+32.3 percentage points), Austin, Texas (+27.4 percentage points) and Las Vegas(+20.0 percentage points).”

So what we’re seeing here is a pendulum swing from one extreme to the other. Formerly red-hot housing markets like Austin and Phoenix are now cooling much faster than other U.S. metros. And this trend will likely continue into 2023.

Economists Predict Buyer-Friendly Conditions in 2023

All of the trends mentioned above point to one thing. The U.S. real estate market is moving steadily in a more buyer-friendly direction.

And that’s a huge change from what we were seeing during the second half of 2020 and throughout 2021. Back then, home buyers across the U.S. had to contend with fierce competition, super-fast sales, bidding wars, and a real estate market that strongly favored sellers.

But the Realtor.com report cited above, and many more like it, show that the market is currently shifting in a way that favors buyers for a change. Many economists expect this shift to continue — and perhaps even intensify — as we move into 2023.

According to a September 29 report from Zillow:

“Sky-high mortgage costs are driving down competition among home shoppers, and a market firmly in favor of buyers is expected next year, according to a majority of economists and housing experts polled in the latest Zillow Home Price Expectations Survey (ZHPE).”

This was based on a survey of more than 100 economists and housing market experts, conducted between August 16 and August 27 of this year. As the report’s authors pointed out, rising home prices have created affordability issues in many cities, which in turn has pushed many prospective buyers onto the sidelines.

Many would-be buyers have now been priced out of the market entirely, due to higher prices and mortgage rates. And of those who can still afford to buy, some might be reluctant to do so for fears that prices will drop over the coming months.

While no one can predict future real estate trends with complete accuracy, one thing seems likely. The housing market of 2023 could be a lot slower than what we’ve become used to.

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NEW YORK & CHICAGO & SALT LAKE CITY–(BUSINESS WIRE)–Private real estate investment manager Highland Real Estate Partners announced today the final close of Highland Multifamily Opportunities, the firm’s debut discretionary investment fund. Highland Multifamily Opportunities raised $44m which surpassed its initial target of $35m and grows Highland’s equity capital under management to $65m.

Highland Real Estate Partners has already begun constructing the fund’s portfolio, with 9 acquisitions completed to date comprised of 211 apartment units in the Chicagoland and Salt Lake City markets. The team is focused on adding value to this portfolio and is implementing operational plans to drive occupancy gains, grow net operating income and enhance asset quality.

Ben Frazer, Investment Partner & Co-Founder, said, “This fundraise positions Highland to continue executing on our strategy and scale our platform and, along with the strong performance of our initial investments, is a testament to the market opportunity and our differentiated strategy. We are grateful for the confidence and continued support of our investors, despite the challenging macroeconomic backdrop, and remain committed to delivering attractive absolute and risk-adjusted returns.”

Dylan Grigg, Operating Partner & Co-Founder, said, “We carefully built Highland from the ground up, scaling our property management business and streamlining our investment processes to drive competitive advantages in the highly inefficient sub-institutional multifamily market. Our investments have benefitted from the vertical integration of property and asset management, achieving strong rent growth, occupancy rates and yield. We look forward to continuing to deliver strong results for our investors.”

About Highland

Highland Real Estate Partners is a vertically integrated manager of private real estate investments, focused on acquiring and operating lower middle-market multifamily, affordable and university housing assets in select markets. Highland aims to consolidate sub-institutional sized multifamily assets and drive returns via exploiting inefficiencies and operating at scale in a fragmented landscape dominated by smaller, undercapitalized market participants. As of September 30th, Highland has approximately $110m in real estate under management, spanning over 500 apartments in the Greater Chicagoland and Greater Salt Lake City markets.

To learn more about Highland, visit www.highlandptrs.com.

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Company will provide the bioscience real estate sector’s only online archive of life science properties, as well as industry statistics and resources, national and regional market reports, and strategic networking events.

Press Release
–

Sep 30, 2022 15:00 EDT

ARNOLD, Md., September 30, 2022 (Newswire.com)
–
Record funding levels for Bioscience companies in recent years have fueled increasing industry demands for more lab space and properties. Investors have answered this call by building into existing markets and creating bioscience hubs in new markets. While facilities play a crucial role in achieving those goals, informed decision-making has been hindered by the lack of comprehensive national data about bioscience real estate, including such basic facts as location, size, construction, and transactions.

Maryland-based Revista has a solution. Revista began providing the nation’s only medical real estate data service, RevistaMED, in 2014, which now boasts more than 1000 users and attendance at their annual executive-level networking event of nearly 500. Now, Revista will be offering the industry’s only property-level database of all U.S. life science real estate, RevistaLAB, with industry statistics and resources, metro and regional market reports, and a directory of industry product and service providers. RevistaLAB will also host high-level, strategic networking and educational events, including in-person forums and webcasts with industry-specific, data-based subject matter and experts.

“We are excited about our partnership with Revista,” says Mark Burkemper of Harrison Street, which is a Founding Partner with Revista. “We share their vision of improving the availability of life science real estate data and information to ultimately facilitate a better-equipped industry that is ready to meet the country’s growing demand for pharmaceutical research & development. We look forward to collaborating with Revista’s well-established team through participation in the advisory board, events and in the presentation of these key resources to the industry.” Healthpeak Properties, Inc. is also a Founding Partner for this service.

“Life Science has become a dynamic real estate sector that is attracting the interest of the broader real estate investment community,” says Erik Tellefson, Senior Managing Director of Capital One, which has a longstanding relationship with Revista. “The increased transparency and analytical tools that Revista is building will provide specific insight into these powerful trends that will benefit both investors and providers.”

First database and national event will be unveiled next month

Revista will introduce data for three bioscience markets—Boston, San Fransisco, and San Diego—in October, roll out the remaining markets during the next several months, and hold a national launch event at the Encore Boston Harbor on Oct. 13-14, 2022. Access to the one-stop online resource will be easy to use and subscription-based. With a simple registration and a highly specialized interface, users can filter and customize the search results in various ways. These resources are provided in collaboration with Revista’s life science real estate industry partners.

The national event will feature six of the most popular general sessions from their medical real estate event with a new life science focus. Sessions include a macro-overview of the sector; a data-driven state of the industry presentation; a Capital Markets panel with executives from top investors in bioscience; a construction & development case study panel; a dealmakers spotlight session, and a real estate economy keynote featuring Jim Costello, Head of Real Estate Economics MSCI | Chief Economist MSCI – Real Assets. Registration is open, and information is available here. The editorial press is free with credentials.

Revista’s resources are being designed for a wide range of potential users, including real estate brokers; property owners, bioscience real estate executives, managers, and investors; advisory firms, investment banks, and underwriters; equity research analysts; academic and government researchers; merger and acquisition firms; development/construction firms; architecture firms; and legal firms.

About Healthpeak

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns and develops high-quality real estate in three private-pay healthcare asset classes of Life Science, Medical Office and CCRC. At Healthpeak, we pair our deep understanding of the healthcare real estate market with a strong vision for long-term growth. For more information regarding Healthpeak, visit www.healthpeak.com.

About Harrison Street

Harrison Street Real Estate Capital (HSRE), headquartered in Chicago, IL, is a real estate private equity firm founded in 2005 that directly and through its affiliates, has approximately $7.5 billion in assets under management (AUM) through commingled funds and public securities products. The commingled funds focus exclusively on the Education, Healthcare and Storage segments of the U.S. real estate market. Since inception, the Firm has acquired or developed over 450 properties in 40 states, including over 60,000 student housing beds, more than 11,800 senior housing units, over 5.1 million square feet of medical office space, and more than 86,000 self-storage units. Additionally, Harrison Street Securities LLC, an affiliate of HSRE currently manages over $780 million in REIT securities through distinct long only product offerings. For more information regarding Harrison Street, visit www.harrisonst.com.

Source: Revista

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The median implied capitalization rate for U.S. equity real estate investment trusts rose in the second quarter, reaching 6.3%. The figure marks a 44-basis-point jump over the quarter prior and a slight 6-basis-point increase year over year, according to S&P Global Market Intelligence data.

The analysis included all U.S. REITs that trade on the Nasdaq, NYSE or NYSE American with market capitalizations of at least $200 million at quarter-end.

Market Intelligence calculated the implied capitalization rate as net operating income generated in the last 12 months divided by the REIT’s implied real estate value — calculated as market capitalization including operating partnership units plus total debt, preferred equity, mezzanine items and noncontrolling interest, less non-real estate assets such as cash, securities or loans.

* Click here to set email alerts for future Data Dispatch articles. * Click here to download the U.S. Real Estate Field Calculations template that includes a line-by-line breakout of the implied capitalization rate calculation. * Read some of the day’s top real estate news and insights from S&P Global Market Intelligence.

Hotel REITs see largest YOY increase

The hotel sector posted the largest year-over-year growth in their implied cap rates, up more than 5 percentage points on a median basis. Within the hotel sector, Braemar Hotels & Resorts Inc. logged the largest increase, up 8.5 percentage points from a year ago. Xenia Hotels & Resorts Inc. and Ashford Hospitality Trust Inc. followed next, with their implied cap rates expanding 7.7 and 6.7 percentage points, respectively.

At the other end, REITs in the specialty sector — advertising, casino, communications, energy infrastructure, farmland and timber REITs — experienced the largest year-over-year compression in their implied cap rates, a median of more than 1 percentage point. Data center REITs also saw cap rates compress by a median 75 basis points.

The median implied cap rate for the retail sector dropped 77 basis points year over year. Within the retail sector, implied cap rates for regional mall REITs fell 69 basis points on a median basis, while cap rates for shopping center REITs compressed by 77 basis points. The “other retail” sector, which includes single-tenant retail and outlet center REITs, saw cap rates drop by a median 96 basis points.

Highest implied capitalization rates

Among the U.S. equity REITs with market capitalizations of at least $200 million, advertising REIT OUTFRONT Media Inc. held the highest implied capitalization rate at quarter-end, at 18.5%.

Two timber REITs, PotlatchDeltic Corp. and Weyerhaeuser Co., followed next, with implied cap rates of 17.6% and 15.9%, respectively.

Information storage-oriented Iron Mountain Inc. and communications REIT Uniti Group Inc. rounded out the top five, at 15.0% and 14.3%, respectively.

Lowest implied capitalization rates

At the other end, Market Intelligence calculated casino REIT VICI Properties Inc. at the lowest implied capitalization rate, 0.2%. Within the recent quarter, VICI completed its acquisition of MGM Growth Properties LLC.

IStar Inc. and Safehold Inc. held the second and fourth spots at 1.1% and 2.3%, respectively. The two REITs announced their merger Aug. 11.

In the third spot was CTO Realty Growth Inc., with a calculated implied cap rate of 1.5%.

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By Gregory K. Tanaka |
chinadaily.com.cn |
Updated: 2022-09-29 13:36

SHI YU/CHINA DAILY

Despite their best efforts, US economic policymakers are not yet out of the woods. Inflation is rising. The “US Labor Participation Rate” continues to decline.

A growing percentage of Americans are feeling the pinch caused by a combination of rising food and gas prices and lower job participation rates.

One can now add to these trends the recent report that “the number of Americans filing for first time unemployment soared to 8-month highs” (Zero Hedge, 21 July, 2022).

The most alarming development, in my view, is that there are now deeper signs of “structural weakness” beginning to appear in the US economy.

For example, “US manufacturing” is a key structural component of the US economy, but US manufacturing has been in decline for several decades. The problem is that those who own or manage US manufacturing companies have been moving their plants offshore to countries that offer much lower labor costs than the US.

While this structural shift has resulted in higher profits for the owners of these multinational corporations, it has ruined the lives of tens of millions of American middle and working class workers who had come to rely on having decent paying jobs located at US manufacturing sites.

Secondly, “the US agriculture,” another structural pillar of its economy, is now under attack by their own federal government which ordered that large swaths of land not be planted this year.

This policy is in parallel with an effort launched by massive multi-state combines to gobble up tens of thousands of small farms at low prices—farms that had once sustained millions of American families in the Midwest, South and West Coast.

To prop up a structurally failing US economy, the Federal Reserve Bank has been furiously printing trillions of dollars with the hope that by flooding the economy with ready cash, economic trends will reverse and turn rosy. This gambit has not worked. Worse, foreign investors are beginning to think the US dollar is not what it used to be because of the excess money printing and have begun dumping their holdings of US Treasury bonds and other US assets. This includes nations with very large economies like Russia, China, Brazil and India.

With more and more nations starting to reject US Treasury bonds and other dollar denominated assets—including stocks, state and local bonds, and US real estate—the dollar itself has begun losing its “global reserve currency” status where other nations were formerly required to trade with each other using the dollar as their medium of exchange.

In halcyon days, having that global reserve currency status meant the US could “export its inflation abroad” because other nations would later be collecting on money they had loaned the US by being paid back in inflated and thus much cheaper dollars.

However, with the great structural weakening that comes from losing global reserve currency status, the US can no longer rely on using the dollar to “export” its inflation abroad. What that means is that this total accumulated inflation will one day come bouncing back on to the US consumer.

Meanwhile, record levels of debt continue to appear across all sectors in the US Total accumulated debt among all 50 states is now running at $1.1 trillion. Accumulated local city and county debt has reached $2 trillion. Total accumulated personal debt among Americans has exceeded $23 trillion and total accumulated debt owed by the federal government has now reached an astounding $31 trillion (US Debt Clock, 22 September 2022).

With massive debt and money printing coming to define US capital markets—and the US slipping deeper and deeper into recession—the real possibility is raising that its citizens will one day weather a period of hyper-stagflation redolent of the 1930’s.

What this means is that economic policymakers in the US are currently facing very stiff headwinds with little relief forthcoming in the way of possible options or solutions.

Gregory K. Tanaka, formerly a banker and a law school dean, is the author of Systemic Collapse and Renewal: How Race and Capital Came to Destroy Meaning and Civility in the US and Foreshadow the Coming Economic Depression (Peter Lang Publishing, 2018). The views don’t necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.

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MIAMI–(BUSINESS WIRE)–Propy, the Web3 real estate pioneer, is launching the first NFT (Non-fungible token) Avatars designed specifically for Real Estate and Metaverse fans. The limited-edition “MetaAgents X Shredders” NFTs were created by noted artist Dan Weinstein. The project’s advisors include real estate influencers and industry forward-thinkers Tom Ferry, Tony Giordano, Alvaro Nunes, Tony Edward, ThinkingCrypto, Zach Aaron, MetaProp, among others.

“It’s an endless open sea of creative NFT ideas out there and as usual, this is where Propy continues to stand out. If you love crypto and real estate then these NFT Avatars are right for you. With Real Estate becoming more crypto-friendly, adding one of these ‘MetaAgents X Shredders’ to your collection or used as your social media profile, will signal to the world and your tech-savvy peers that you are a visionary in a new digital world of real estate,” said Natalia Karayaneva, CEO of Propy.

Over 6,000 joined the waiting list in anticipation of the “MetaAgents X Shredders” drop on September 27, 2022 at 10:00am pacific time on seen.haus and can only be minted with PRO – Propy tokens. First come first serve and sold by lottery auction. Starting price 500PRO.

“These characters are THE RESISTANCE – shredding through the Metaverse, re-inventing the new future. The meta world created by the agents of change – fair, honest and empowering,” said artist and designer, Dan Weinstein.

The Propy NFT Avatars come with unique utilities like access to the Meta Agent educational course, owners become members of DAO (decentralized autonomous organization) and receive a ticket to the Web3 & Real Estate Summit coming up on October 27th in Miami. The Meta Agent certification and the Summit will help real estate fans navigate metaverses and Web3 proptech and apply the learnings to their daily business.

“Many agents and real estate investors are interested in crypto and NFTs. As more home buyers utilize crypto earnings to purchase property, displaying an avatar immediately identifies these agents as someone who understands how cryptocurrency and NFTs work,” said Tom Ferry, #1 US Real Estate coach.

More about the NFT Avatars can be found here: https://propy.com/browse/meta-agent-nft-avatars/

About Propy

Propy, founded in Silicon Valley, is on a mission to revolutionize real estate. The company’s smart contract innovation removes inefficiencies, streamlines everything from offer to closing to recording title, records everything securely on blockchain, and enables buyers and sellers to use traditional financing, dollar or cryptocurrency payments, or NFT-ed property sales. The company has processed $4bn in transactions and recorded them on blockchain. Learn more at Propy.com

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A partnership between Trinity Capital Advisors and Starwood Capital Group is beginning what’s expected to be the largest mixed-use research development in North Carolina’s Research Triangle, a project totaling nearly $1 billion in investment to meet anticipated demand from growing life sciences companies.

The 109-acre advanced life science campus unveiled earlier this year, called Spark LS, is scheduled to get underway this week in Morrisville, North Carolina, after months of “blocking and tackling” with the site plan’s approvals and permits, said Jeff Sheehan, managing partner at Charlotte, North Carolina-based Trinity Capital Advisors.

The first phase of the 15-building, 1.5 million-square-foot campus totaling four buildings and about 500,000 square feet — or about a third of the project — is beginning on a speculative basis, Sheehan told CoStar News.

The initial phase is set to include two bio-manufacturing buildings and one multi-story research and development building. A fourth building is expected to help bring amenities to the campus. (Trinity Capital Advisors)

“We are going on a speculative basis, but you could call it a very informed and confident speculative approach because we have three existing projects in the market totaling roughly 4 million square feet and we are seeing the demand firsthand,” Sheehan said. “We are hearing about demand falling off in other life science markets, but we haven’t experienced that here yet.”

Life science has been a bright spot in the office market, but investment velocity has slowed in recent months as the rising cost of debt has hit some investors. North Carolina’s Research Triangle is still seeing a rise in rental rates as vacancy dwindled through last year, according to a recent report by Cushman & Wakefield. This comes as the Research Triangle region has about 8.2 million square feet of life science space under construction, according to the real estate firm.

The asking rents in North Carolina’s Research Triangle increased as vacancy dwindles for life science space in the region. (Cushman)

Sheehan said he suspects North Carolina’s Research Triangle region hasn’t experienced a drop in demand because the market is relatively affordable for real estate costs and on labor than other U.S. cities typically known for life science, including San Francisco, Boston and New York. Those costs have become increasingly important to life sciences companies as they look to stretch their last round of funding, he added.

The life science campus is being developed in the Raleigh-Durham area, which has one of the world’s largest life science clusters and is home to 569 of North Carolina’s 735 life sciences companies, according to Cushman & Wakefield data.

At full build-out, Spark LS is expected to have 1.5 million square feet of lab and bio-manufacturing space meant to help would-be tenants advance from discover to delivery. The campus will be located near Research Triangle Park, a mile from Interstate 40 and less than four miles from Raleigh-Durham International Airport. Plans include 15 buildings connected by green spaces, restaurants, health-conscious retail, a STEM education and amenity center, and several multiuse outdoor recreation areas.

The initial phase of Spark LS includes two bio-manufacturing buildings and one multistory research and development building. The phase also includes an amenity and retail center with a fitness center and a place to house eateries. The initial bio-manufacturing building is expected to be complete by the end of June 2023, with the other buildings following in 2024. The first phase of construction on the campus also includes an amphitheater and outdoor common spaces.

The new life science campus is expected to include outdoor spaces. (Trinity Capital Advisors)

The buildings will have built-in flexibility to cater to a wide variety of would-be tenants, Sheehan said. Sheehan declined to share the specifics of the asking rates on the space, but said they are in line with market rents for flexible space. The initial phase is bent toward delivering bio-manufacturing space because North Carolina can offer this kind of property at a discount compared to Boston or New York, where this kind of real estate is difficult to find, Sheehan said.

The real estate firm has a $2.2 billion portfolio of roughly 4 million square feet of life science space in North Carolina and has worked with hundreds of tenants at various stages of growth.

Unlike the Research Triangle Park, the nation’s largest research park totaling 7,000 acres, which has certain development covenants that don’t allow for a true mixed-use development, Spark LS is adjacent to the park, not in the park, giving the developers the ability to inject a truly mixed-use environment into a life science campus.

“We are putting our money where we think the market is going and that’s this project that blends bio-manufacturing and research and development in a highly amenitized campus setting,” Sheehan added. “For the first time, you can have manufacturing and go to a floor where researchers can advance new ideas and collaborate on the spot at a large scale.”

Cushman & Wakefield’s Douglas Cook and Suzanna Nichols are overseeing the project’s leasing efforts on behalf of the ownership group.

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