Good morning, everybody, and welcome to Alexandria's 2023 Investor Day. I'm Joel Marcus, and Founder and, I should say, yeah, former, and Exec C hair of Alexandria, and I'm proud to lead this extraordinary management team that represents, interestingly enough, over 1 million hours of experience here at Alexandria to present to you on Investor Day. 30 years ago, we started from humble beginnings in a market that people doubted. Doubted our product, doubted our industry, and the fact that things were very uncertain. We pioneered an asset class and created the first and only, still only, publicly traded pure-play life science REIT. For 30 years, we've delivered lasting innovation by strategically positioning ourselves at the vanguard and heart of the life science industry ecosystem.
And for 30 years, we've delivered distinctive impact by relentlessly innovating and advancing, never settling for the status quo, but always trying to raise the bar each and every day, pushing toward excellence and outperforming the major indices over the long term. And many of us use the Navy SEAL credo, "The only easy day was yesterday." It's interesting to note that Jeff Bezos said, "Innovation is not just about coming up with new ideas, but it's about executing them effectively." And I think we take great pride in 30 years, we've done just that. Today, we're living in unprecedented times, roiled by macroeconomic headwinds, and obviously, geopolitical conflicts are on much of our mind today.
But we're steadfast in our confidence that we are uniquely positioned, mission-driven, and dedicated to improving human health and the quality of people's lives, as that remains as vital as ever. So yesterday, today, and tomorrow, we will continue to be relentless in our innovation, our drive, and our ingenuity. We're disciplined, we're agile, we're decisive, and we've made, made many, many important key decisions, and I hope we've managed well our assets, our income streams, and our balance sheets for over 30 years. I went back and looked at our 2006, which was our 10th anniversary, on the eve of the 10th anniversary of coming public, and looked at what we said about ourselves as the theme of that annual report, and it's pretty true today, 15 years later, and I'll just read it briefly.
On the eve of our tenth anniversary as a New York Stock Exchange-listed company," so this is in 2006, "the critical components of Alexandria's enduring success are aligned with the distinguishable characteristics that define preeminent international brands: knowledge of the customer, superior product, focused niche, global reach, and sustainability." I think, pretty interesting, very true today in many respects. So I think we'll move to... This will be our, kind of flow of the day. We'll try to make it efficient. For those who are here in person and, on our webcast, our safe harbor, and we did file our 8-K this morning, so refer you to that, as well.
So as we think about and kick off 2023 Investor Day, what comes to mind is a truly pioneering brand, a trusted partner to the leaders in the life science industry. We refer you to yesterday's announcement with Eli Lilly, the number one pharmaceutical company in the U.S. by market cap, as an example of what we believe to be a trusted partnership relationship, and we're very proud of that. That relationship goes back to 2008. So Jim Collins, we're fond of using this quote, but it's really important because when you look back at a 30-year situation, or you look at a company, no matter what stage you're in of growth, you always think about three things: Can you make a strong and enduring financial impact, meaning superior results?
Have you made a distinctive impact on your markets and your value, if you will, and you have lasting endurance? I remember back at in 1984, one of the really highlights of my biotech career was the signing of really the first big joint venture in biotech between Kirin and Amgen. And I was representing Kirin in those days, and Amgen was a little-known company, originally named Applied Molecular Genetics, and then shortened by George Rathmann to be Amgen. And the product that we were creating, this joint venture, which was really a hallmark of the industry, was erythropoietin, which went on to be a blockbuster billion-dollar drug. Actually, Lance Armstrong used it, and that got him caught in his doping issue. But so sorry about that.
But, the reality is, I remember, at the closing meeting, it was like May 12, 1984, and, Amgen got up and said, "You know, we're very proud. We've been in business, like, seven years." So then Kirin, after George did his thing, Kirin CEO, Dr. Kubo, got up and said, "We're proud to be part of this joint venture. We've been in business over 300 years." So it struck me that, lasting endurance has different meanings to different people, but, 30 years is not bad. We're one-tenth of what Kirin was.... So when we talk about superior performance, I think we always go back to, not today, not the, you know, the, what you might find on a screen in a moment in time, but really over a long period of time.
And since our IPO, we're truly proud that we have benchmarked very positively against the relevant indices and against, you know, peers or, you know, as close as you can come, because there is no peer peer. And we feel very, very, good about that. So we're proud of our accomplishment. When you look at Alexandria's competitive advantage, you know, sadly, Charlie Munger, as you know, just passed away over the last day or so. But Warren Buffett said, "A truly great business must have an enduring moat that protects its return on invested capital." And that's really true, and you'll hear more today about clearly, what is on the mind of a lot of investors and analysts is, gee, does supply change the equation for your successful business? And we'll deal with that.
That's probably the biggest question that has come up through, you know, the Nareit meetings and so forth. Before I get to the left-hand side, keep in mind that, we have today on balance sheet, the ability to almost double our size over the coming years. And I remember saying that in 2008 and 2009, and a very smart former analyst, Mr. Bilerman, I remember, got up at an I nvestor Day then and said, "Why don't you sell Mission Bay and the assets you have in Cambridge you're developing, because your balance sheet sucks, and, you know, if you could just get them off balance sheet, you'd be in much better shape." Well, we, like Kirin, we think about the long term, not a day, a month, a year.
We think about 300 years, not really, but a little more than a day, a month, and a year. And what came out of that was our ability to use those unproductive assets at that point in time on balance sheet and grow the company during the boom days from 2013, 2014 through COVID. Had we not had those on balance sheet, we wouldn't have the wherewithal to meet the tenant demand and also to grow the company. So we're very proud of that. I think on competitive advantages, and Dan's going to get much more into that, we talk, we talk about first movers, critical, high quality assets, to me, longstanding relationships and experience. And that's the moat we built, and I don't believe anybody can cross that moat, and certainly hasn't. Our mission is simple.
It's to create ecosystems and clusters that really enable scientists at the bench to create, you know, great cures for the future. Every single one of us, every day, we hear about stories. Somebody's got pancreatic cancer. We're going to watch a brief video in a few moments about glioblastoma, just on and on. Most diseases today have not been solved, so we believe we're still in the early innings. And our solemn mission is to be at the vanguard of this effort. And you know, just recently, one of our clients broke ground, really a barrier, creating the first approved product created by gene editing techniques for sickle cell anemia. So pretty great. You know, it's true that, again, Jim Collins, distinct going from financial performance to distinctive impact.
We've had it with our tenants, but we've had it more also in the general community. And I guess we help tenants to create major impacts by their therapies and cures, and that's our job. But we've also done it individually as a company, and I think that's audacious, and we can't be more proud. At a JP Morgan conference in 2017, Andy Conrad and I, on the back of a napkin, literally said, "The opioid crisis sucks. We've got to do something about it." And from that came a whole evolution. You'll see it, the small little picture, addiction treatment. We created, we delivered the infrastructure, they delivered Verily, which is a subsidiary of Google, the data analytics, to set up the first continuum of care for opioid addicts in the entire country.
No one has done it from addiction to sober living, to, family reunification, job training, and job placement. No one's ever put it together. Hard to imagine that state, local, and national officials can't think that simply, but no one's done it, no one's done it since. And we've treated over 6,000 addicts in and around Dayton, which had, at that time in 2017, was the highest per capita death rate in the United States. So pretty amazing. So we're very proud of our distinctive impact. And last thing, endurance. 30 years, again, nothing like Kirin's 300, but still pretty great. And I think we'll talk about in a while, Marc, talk later on, kind of the, highlight of the day will be Dayton, where we continue to grow in 2024, which is a milestone year for the company.
We talked about seasoned management team. Our executive management team has an average of almost 20 years with the company. It's a family. It's not just a company, and we act like it, and we treat everybody like that, and it's a pretty special place. I've never, never experienced anything like it in my entire life, so we're very proud of that. What can I say here? You know, there's a famous quote by Warren Buffett again, and he said, "Predicting rain doesn't count. Building the ark does." And I think what we've done from 1994 through the Great Financial Crisis to now, is we built a pretty great ark, and I think, our stellar balance sheet really enables us to navigate in these high seas, if you will. And I think our growth over that time period, amazing 30 years, has been astounding and audacious.
Now, the next slide is one of the great slides. When we founded this company, if you just look at, you know, what was happening in the biotech industry, it was in its nascent, you know, beginnings, and even today, we're still in the very early innings. Just look at what Steve Jobs said about the 21st century. And, the increase of technology and innovation, we think is gonna be continuing to rapidly accelerate. And we're, I think, more optimistic than ever and hopeful because, you know, science is accelerating rapidly, but we still have major diseases to conquer. I'm going to skip over this simply to say we've created what was an idea and a small niche in those days to some extent, to a large extent, a somewhat mainstream asset class that Peter will talk about in a little while.
This is a picture of our first building we bought in 1994. Our tenant was Advanced Tissue Sciences. Kind of a meager beginning. Looked kind of like you know, Wuthering Heights a bit, but it's probably the best real estate in all of San Diego, sitting across from the Torrey Pines Golf Course. Today, Dan and his team have created a mega campus down there you'll learn more about, and we're very proud that the $3 billion Altos Labs is our anchor tenant there, focused on disease of aging. What could be more apropos at this point in time and probably beyond the GLP-1 category, probably the next big blockbuster. We came public. A couple of our analysts are here today who followed us in those days, 3.5 years after we just started the company.
So I think pretty, pretty good track record. Quickly, we used the Michael Porter thesis of clustering for this industry as opposed to most industries, particularly tech, is not a cluster-driven industry. They don't want to be next to each other. But biotech, pharma, and the life science industry, they thrive on being together, and that's been part of the secret of our success. And we pretty early on identified, this is our, kind of Medallion, where we, we thought and believed that we could, identify four critical drivers of what really created location that mattered, our clusters, and build the ecosystems around and within those. Got to have a great location, you got to have innovation, you got to have risk capital, and you got to have talent.
So many places, it's funny, we're on calls all the time with locations saying, "Could we be a biotech cluster?" But if you don't have these or you can't grow these pretty quickly, you can never get there. We're very proud of what we've done, from reclaimed land in Mission Bay in the early days to what it is today, anchored by now the Warriors, you know, and Chase Center. Just an amazing, I think, what we've been able to do over that period of time. And I remember, again, many people during the GFC said, "Just sell that land. Don't, you know, it's a hindrance to your balance sheet," but I think we made hay with it. In New York here, we're sitting in the perfect example.
This was a, you know, a brown site that had a parking on it, and we created, with Mayor Bloomberg's help, starting back in 2005, to what you see today, something really beautiful and meaningful and really the anchor of the commercial life science business in New York. When we started, there were only two commercial companies, believe it or not, doing commercial research in New York. Lots of academic research and clinical work, but only two. Today, there's well over 100, and we've been mostly responsible for that. So Cambridge, same thing. What we've been able to do there over the years, pretty impressive. Marc will pick up on our balance sheet. And, well, let me go back one second.
After the GFC, our most important goal was to get rated because we had an unrated balance sheet then, and we've done, I think, a splendid job of building that into what it is today. Our other main goal was to get other sources of capital beyond just common equity, and we started our joint venture programming back in 2011, 2012, with the Longwood Center. We ultimately sold to our partner, because Longwood turned out to be more of an institutional base rather than kind of a commercial base, but it was a great success. Let me just go to my notes one second, so bear with me.
So I would say that, the impressive at bull one, and these are just some of the stats that the biotech industry had. We were able to take advantage of because we had the so-called unproductive assets on our balance sheet at the beginning of this run, and that really is how we're positioning the company for the future. And, let me just say before I transition here to Dan, the four key components that really we're gonna go forward with is the strength of the brand, life science fundamentals, our mega campus strategy, and how that dovetails into the supply issue, and superb financial management, and you'll see that kind of go forward. So Dan, take it away.
Okay. Good morning, everyone. Is this on? My name is Dan Ryan. I'm the Co-President, and I also am the Managing Director of the San Diego region, so I'm very pleased to have you here this morning. Did everybody hear that, or should I do it again? I don't mind talking about myself, so I'll do it again. I'm Dan Ryan. I'm the Co-President and the Regional Managing Director of the San Diego region. We're thrilled to have you here this morning on this cold December morning, and so, you know, I've been asked to talk about what makes us special, what makes us, what makes our brand irreparable. And we chose the hardest word we can think of to describe us.
And so I think it starts with, you know, as Joel mentioned, the brilliance that Joel and Jerry had when they started the company, which is they didn't think about a real estate delivery firm. They thought about a company that could help with cures. And each of us have been touched by that. I'm sure everyone in this room has had health issue or had people with health issues or mental health issues or. And the worst thing that you can hear, as Joel mentioned, you know, the doctor, even the best doctors say, "Hey, there's nothing more we can do for you." And we talk about 10,000 diseases, of which 10% of them have treatments.
We've inserted, and I think that's the brilliance of what we have as a company, is we have a purpose to try and participate in making life better, longer, healthier, for humanity. And I can't think of a greater calling than that. And I think that purpose, in turn, attracts the best people, the best minds, the most passionate hearts, and the most dedicated people. So I think that, for sure, is the one North Star that we have, is our purpose. And we are old, and in this business, it's an advantage, a two point. I mean, when you get to Joel's age, maybe not so good. But, age is great. We've been doing this for 25 years.
I think Joel mentioned an amazing statistic when you think about our 19 years of average tenure of our executive team. That's 1 million hours of experience. And before life science was even a twinkle in the eye of many other life science pretenders, we have been buying the best real estate, aggregating the best mega campus sites, establishing the the deepest community connections, and building the deepest trust with life science entrepreneurs and scientists, institutions, and investors. So we've been at this for 25 years. I've been in the market for all, for all that time. So we know virtually everybody, and I think everyone on this panel has the same experience. Because we have such a massive lead in the assemblage, because we started so much earlier than everybody else, we got all the best sites and then aggregate around them.
So you can think about this in 1994, nobody else had this idea except Joel and his partner Jerry Sudarsky, to say, "Hey, we can create a niche out of this." And so they went and bought things like the One Alexandria site across from the Torrey Pines Golf Course. They bought in Cambridge. They bought in Mission Bay before anyone else had a chance to do that. And from there, we built it. We built scale on that. And we did that primarily to respond to the two most important questions that we typically get from great life science companies, which is, A, how can I grow? And B, how do I get the best people to fill the space and recruit and retain them?
Great companies want the scale that we can provide, so we can oftentimes take them, and you'll see in our stats, you know, 85% of our leasing comes from our own tenants, who typically, like, I mean, 25,000 sq ft. This happens every day for us. Something good has happened, they've raised money, they've had a discovery, and they go from 25,000 sq ft to 50,000 sq ft to 100,000 sq ft. And that is really how we spend our days, working on our own portfolio tenants as they grow. One thing that unites all of us at Alexandria is we are passionate about excellence, and we've been recognized by the Building Owners and Management Association with a series of TOBY Awards, the building of the outstanding building of the year, across many of our regions.
You can see this in this slide. Hunter just bragged to me the other day that they went to their regional Greater Boston Awards, and they submitted seven applications, and they won all seven. So a pretty amazing thing. He is a braggart, so avoid him at the break. Our industry is... Because there's been some new participants, many new participants in our in what, you know, unfortunately for supply, we've also had so many horror stories about folks who have taken what they think is an easy idea to build or operate a science building, and they don't understand the complexity of it. And they've had power outages. We had one tenant that they shut down the exhaust fans and the fume hoods, and all the chemicals flooded back in the lab, and they all had to evacuate.
No, it wasn't. It was another. They will be our tenant, though. Mark my words. They've had, you know, breakdowns. They've had overburdened electrical infrastructure, because that's a big deal now. We had a tenant, just, one of Hallie's great contacts, who said, "I would like to just be in a building where the toilets flush." So that's not all we're good at, but we have been doing this for a long time. And if scale and recruitment are one and two, the way to kind of think about it, operating expertise and security are three and four now. Great companies don't want to lease from some lifestyle pretender. They want rock-solid expertise, and that's what we have at Alexandria, sadly, a lot of the time.
This is what happens when you share your first session with Joel. He takes 20. We still had 24 minutes. He took 20, I had four minutes. But I will just—I want—This is an important slide, so I do want to bring it up. This is how it all manifests. Great companies with a long-term relationship, so we've had—we've done repeated business with. You know, the list goes on and on, but certainly, we're going to talk a lot about Lilly today. We have over 1 million sq ft with them in eight facilities across the country. We've had a 15-year relationship with them, a really amazing time.
And so, to that point, Joel mentioned this earlier, we issued a press release yesterday about a really interesting novel Lilly Gateway Labs project that we're doing in San Diego. The novel offering will combine the best of the world's largest pharma company with the world's leader in life science real estate. And companies are accepted into this program get the benefit of both Alexandria's expertise and delivery expertise, as well as access to Lilly's global network of scientific expertise. So it's a really unique program where companies coming in get the great real estate, and they get basically tutelage to help them grow. So it's a super exciting program, very novel, never been done before, and we're excited that we put that together.
This is probably one of my most favorite slides because I think this is what it's all about. Everyone talks about innovation. I walked here this morning. I walked by Vornado's project, and it said, you know, innovation meets convenience. So everyone talks about innovation. I don't know what's so damn innovative about an office building in New York, but anyways, innovation was there. The difference for us is that we have done it. We've started this. We've come up with new products. We've come up with investment platforms. We've come up with all new ideas that everyone else has copied. We are great innovators, and we've been doing it for 30 years. So when people talk about it, I think what Joel said was perfect: It's not the rain, it's, did you build the ark?
And I think we've demonstrated that we can build the ark. I won't belabor this, but I think it all comes down to really this one big important thing, is that we do lots of great things, but the most important thing that we do is we have a handshake, people trust us, and when you're in the mix, people do not want to take risk with their facility, literally risking billions of dollars, their entire existence in their facility. Because if the lab goes bad or the science goes down or something bad happens, they have lost everything, and they do not want to put that in the hands of new people, of any new life science pretenders. And that's what we have most, is our trust. And with that, I will turn it over to my colleague, Hallie Kuhn.
Thank you, Dan. Good morning, everyone. I'm Dr. Hallie Kuhn, SVP of Science and Technology and Capital Markets. I'm joined by my colleague, Hunter Reed, Principal of Science and Technology. This morning, we're going to discuss the fundamentals of the growing $5 trillion secular life science industry, our tenant health, and how Alexandria's unique infrastructure meets the needs of life science's highly technical requirements in the lab. There's one number to remember today, 10,000. 10,000 known diseases, of which only 10% have addressable medicines, and very few of those actually have cures. The numbers are staggering. There's projected to be nearly 2 million cases of cancer diagnosed this year. Nearly one in eight individuals are living with Alzheimer's, and by 2050, the number of individuals with Alzheimer's is expected to grow to over 12 million.
While these stats reflect the scale of the challenge, human health and disease is deeply personal. We at Alexandria have multiple pillars of the business, and through that, we get to interact with amazing caregivers and patients and innovative companies. One of those individuals was Dr. Steven Keating. Stephen was a friend of Alexandria's and a deeply curious mind, and we're honored to share this video of him celebrating his legacy today.
In 2007, I volunteered for a brain scan. I was actually looking at fear. I was in a functional MRI, and I was actually looking at images of spiders and things like that. And I asked for the data back. I wanted to see my brain, and they said: Oh, by the way, we found a small abnormality, but don't be concerned. So I went back and got it checked by a neurologist specifically, and they said: Well, we don't know what it is, but you're not symptomatic. Let's check it out in a few years. Last summer, I started to smell a very strange vinegar smell while I was in my own bed, and I thought, you know, no, no one's cooking, like, midnight. This is an issue.
So I went back and looked at the data and thought, where is the smell center in the brain? And it turns out it's right near where that abnormality is. Three weeks later, I had open brain surgery, and they cut out 10% of my brain. Switch shoes with me for a second. You're feeling normal, and then you're told in three weeks we're going to cut out 10% of your brain. And, oh, yeah, it might cut out your language center and your personality. Okay.... I never would have gone to the neurological slope if I didn't have the open data from the research scan. The world is a lovely, splendid, and fascinating place, but most of all, to me, it's beautifully curious.
I had a moment while watching that, where I realized that, he was presenting that right on the stage, and those scans were on these monitors here. So it's stories like Stephen's, that underpin Alexandria's mission, and it's why we are humbled to work with incredible life science companies that are working day in and day out. We do our job so life science companies can do theirs, tirelessly pursue the prevention, treatment, and cure of disease. Just this year, our tenants are conducting over 2,500 clinical trials, and the culmination of decades of work and billions of dollars of spend are over 235 approved therapies by Alexandria tenants. And so as we move on to life science fundamentals, the undercurrent is massive unmet medical need.
That truly is the demand driver, and why the life science fundamentals are resilient in the face of economic headwinds and are poised for long-term growth. There are six life science fundamentals that help us map the health of the industry, and we're going to walk through each one. First, there are multifaceted sources of funding for companies in this industry, ranging from biopharma R&D, private venture capital and equity public markets, government funding, and philanthropic funding. In 2022, there was over $450 billion deployed to the industry. As it relates to biopharma R&D, since 2000, over $3 trillion has been deployed. This reflects a deep commitment to developing innovative research projects, and 16 of the top 20 pharma spenders are Alexandria tenants.
Biopharma will continue to be incentivized to commit significant capital, given patent expirations over the next decade, both driving the need for new and innovative therapies to potentially overcome a loss of nearly $200 billion due to expired patents. And this is healthy for the industry, and it's good for patients, because ultimately it leads to less expensive generics, and it also rewards the companies that are most innovative. And the good news is that there's over $1.1 trillion of estimated firepower for biopharma companies to deploy to bring in new and innovative science. And M&A has had a great year in 2023. In fact, current revenues of top 20 pharma companies, for every three dollars, two of those stem from partnerships and acquisitions. Transitioning to private biotechnology.
Since 2019, funds that deploy capital to life science companies have raised over $200 billion. And while year to year, there's going to be variation due to uncertainty in the markets, this is a historic amount of dry capital that will continue to be a strong demand driver. This year, life science venture funding has come off the peaks of 2021, but it still remains strong, above 2019 and any year previously. Now, on the equity market side, it continues to still be challenging for small and mid-cap biotechs. Those that have positive data readouts can access the secondary markets and raise significant sums. Those that have negative data or a slow cadence of news still face headwinds. But if you look at this chart, you can see that the follow-on financings raised this year are healthy and in line with historic averages.
Now, with respect to government funding, since 2019, the NIH budget has increased 25%. These dollars, in the form of grants, go to institutions and companies that are working on the new science that in 1, 3, 100 years, 300 years, may become the next new set of medicines.... Philanthropy is another pillar. Institutions like the Chan Zuckerberg Initiative and Seattle tenant, the Bill and Melinda Gates Foundation, deploy billions of dollars every year to catalyze innovative science. The culmination are FDA-approved therapies. These include, just this year from Alexandria tenants, treatments for RSV in newborns, ALS, and new and innovative treatments for obesity and, diabetes. Zooming in on 2023, we expect it to be a near all-time high for novel and biologic approvals by the FDA, and indeed, this slide is already outdated.
As of this morning, there have been 52 approvals. New modalities, such as cell, gene, and mRNA therapies, are very much in their early innings. Akin to monoclonal antibodies, where the time between the first and second approval was 10 years, whereas the time between the second and 100th approval was 20 years, we expect these therapies to proliferate in the future. Now, changing gears. The integration between biology and AI is a current demand driver of space and will continue to be a driver into the future. AI is not new to the industry. The FDA has reported over 100 drug products that have used AI in their development process, over 170 medical devices enabled by AI. However, what is new is parallel computing power, which enables the processing of vast amounts of data.
We have tenants that are processing petabytes of data a week. To put that into scale, that's 500 billion sheets of paper filled with zeros and ones. And what this looks like in practice is that our tenants are generating chemical and biological data in the lab. This feeds the MI, or AI, excuse me, our machine learning algorithms. What they learn from that and that output can then be fed back into the next set of experiments. It's a highly integrated process. One of our tenants, Genentech, recently announced a collaboration with NVIDIA, where the stated goal is to combine AI with clinical data and research in the lab to uncover treatment patterns and vast amounts of data that had previously been uncovered.
As an industry pioneer, Noubar Afeyan, the Founder of Flagship Pioneering, has stated, "Alexandria's essential lab space infrastructure is integral to companies that are working at the intersection of AI and biology." Now, we'd be remiss without taking a step back and acknowledging the state of the healthcare industry, with over $4.2 trillion in annual expenditures. The majority of this is healthcare delivery, that is, hospital physician visits. Less than 15% is due to prescription medicines, and nine in ten generics prescribed... Sorry, nine in ten medicines prescribed are generics. And given all the rhetoric, we wanted to discuss the disconnect between net pricing and gross pricing, because the fact is that on average, the net prices of medicines is going down. With insulin, it has declined 20% since 2007.
The disconnect is that middlemen, such as pharmacy benefit managers, or PBMs, build in opaque discount and rebate structures that overinflate the gross pricing. It's vitally important that patients have impact to novel medicines, and biopharma manufacturers are just one piece of a very complicated equation. The bottom line is that innovative new medicines can both improve patients' lives and reduce healthcare costs. Think fewer visits to the ER, or with a new class of GLP-1 agonists, not only targeting obesity and diabetes, but reducing heart attacks and strokes, or early diagnostics that catch Alzheimer's or cancer early to prevent expensive therapies down the road. The foundation of the life science industry is strong, and as Joel discussed with the trajectory of the Nasdaq Biotech Index, the trajectory is positive. Bioscience innovation is accelerating at a historic pace, and the demand for longer, healthier lives will not abate.
As a recent report by Stifel stated, "The potential financial scale and human impact of bioscience innovation is larger than any of us dare to imagine." And with that, I'll pass the baton to my colleague, Hunter.
Thank you, Hallie. Good morning, everyone. So let's talk about our tenants. Alexandria is not only focused on the delivery and operation of a tenant's lab space, but we also establish deep and meaningful relationships with our tenants and have a shared commitment in their success in the discovery and the development of new treatments and technologies. These relationships have helped result in an industry-leading tenant roster. And we'll now take a moment to double click into a couple major sectors of this tenant base, and you'll notice a couple key themes here. First, a diversified tenant base with no one tenant type consisting of more than 25% of our ARR, and excellent rent collections above 99%. First, with multinational pharmaceutical companies.
These are key powerhouses for the discovery, development, and commercialization of critical, critical therapies, having generated north of $750 billion in revenue in just 2022 alone. What's important is that they continue to innovate. Take these GLP-1 drugs, for example, for treatments like obesity, from tenants Eli Lilly and Novo Nordisk. These drugs, by some estimates, actually have the potential to become the largest products in human history, surpassing 2022 iPhone sales of $205 billion. But what's more important here is the creation of massive health impact for these patients and their comorbidities. And this would help address the over 2 billion overweight adults globally over time. Comorbidities include things such as heart disease, diabetes, and cancers.
As these organizations scale their R&D efforts, we anticipate that they will continue to leverage their $1 trillion in firepower to tap talent and collaboration opportunities across both the global biopharma landscape and our clusters. Alexandria is proud to support 16 of the top 20 multinational pharmaceutical companies in our spaces, for what's a critically important piece of their research and development, while remaining a small percentage of their global OpEx. Now, the life science product service and device companies are truly important pillars of the biotech ecosystem and are often described as the picks and shovels of the industry. Tenants in this category could be manufacturing and discovering things like new sequencers, cell analyzers. They could be performing critical blood tests or helping manufacture complex medicines, such as our tenant, MilliporeSigma.
Within this category, there's really been remarkable progress dating back to the first sequencing of the human genome less than 20 years ago. To today, we can read, write, and even edit DNA, the source code for all living organisms. And speaking of editing DNA, our public biotechnology tenant, which Joel mentioned earlier today, Vertex Pharmaceuticals, pictured here at their San Diego site, recently received the world's first approval for a CRISPR-based therapy for sickle cell disease. Vertex is an over $90 billion market cap company that's built its franchise on life-altering medicines outside of oncology. Initially, in cystic fibrosis, most recently in sickle cell disease, and they're even advancing pioneering new technologies whereby they will leverage stem cells to produce insulin inside the bodies of diabetic patients. Now, our private biotechnology tenants truly do represent a pioneering, pioneering, and well-capitalized companies.
They're often founded to pursue novel technologies that will have profound impacts on human health. Take, for example, Altos Labs, pictured here, as we mentioned earlier, who will anchor our OAS campus in San Diego. This group was founded with $3 billion in private venture capital. This is the largest private financing in the life sciences industry, and they're truly pioneering novel science to focus on diseases of aging. And Altos really just represents one example of how Alexandria's team and our science and technology team, whose backgrounds in venture capital or as trained scientists, provide advantage to underwriting and preferred leasing access. And finally, our institutional tenants, who are primarily financed through bipartisan research, and they're typically focused on pursuing basic science that may one day represent discoveries that are simply unthinkable today.
And what's interesting here, if you think back to the FDA approvals that Hallie mentioned as being a key metric of success, much of that initial research will flow through these institutions, and their output is often measured by publications. Encouragingly, recent data shows that the output of scientific publications has effectively doubled over the past decade. And so we'll now take a moment to think about the day in the life of our tenants and the infrastructure that we are providing to help support their discovery. And Alexandria has really helped pioneer the essential lab space category, and this asset class supports life science-focused tenants who simply could not exist without critical infrastructure like Alexandria's. Namely, the development of medicines is not possible without dedicated lab infrastructure. Or to put it simply, you can't cure cancer from the couch.
Importantly, it's the science that drives the need for space, akin to a data center where bits and bytes and the accelerations of industry technologies like generative AI drive the need for their 24/7, 365 specialized facilities. We, too, are fueled by data.... And in this case, we're talking about biological and chemical data that comprise of the billions of dollars of valuable research that must be supported by facilities like ours. And these facilities are so much more than just four walls and a lab bench. Highly technical, yet reusable infrastructure, lays a critical foundation for the bespoke instrumentation that's utilized by our tenants, and is evidenced on the right here on the slide, with examples such as -80-degree freezers or sequencers, and even high throughput robotics. Now, just for a moment, put yourselves into the lab coats of one of our tenants.
You're a private biotech, funded by one of the top venture firms out of Silicon Valley. Your founders have dedicated their lives both to the treatment of patients and to the discovery of new medicines. You've just received an actual patient tumor sample that you'll be studying to understand what targeted therapies this tumor may respond to. And so if you walk with me through the slide here, you've received this critical piece of your research. You need to store this in your - 80-degree freezer. Simultaneously, you're setting up an experiment at the lab bench. Then you move to process your tumor sample in a specialized biosafety cabinet. Then you head over to your desk.
You're going to document the ongoing experiment, analyze data from the prior day's run, then head to the conference room to meet with your colleagues and discuss the current data that you're generating and plan future discovery work. Then it's back into the lab. We're going to image our tumor sample in a microscopy room, then prepare that sample for overnight incubation, and at the end of the day, we need to dispose of our chemical waste and prepare for the next day's experiment. Now, remember, it was the science that dictated the need for this space, and science does not follow a nine to five punch in, punch out schedule. The ebb and the flow between the lab and the non-technical spaces is critical to the R&D process, and this can't be decoupled. Another critical aspect of our infrastructure is Alexandria's focus on sustainability.
Alexandria is truly a trusted partner to some of the most innovative life science companies, and this provides us with a great opportunity to align our strategic sustainability goals with that of our tenants. Examples of this effort include 751 Gateway in South San Francisco, which is the first commercial all-electric building in the Bay Area, or even 15 Necco, which is leased to Eli Lilly, where Alexandria is targeting a significant reduction in fossil fuel use through the utilization of geothermal energy. And finally, by investing in renewable electricity, including the solar power purchase agreement, that will supply renewable electricity to the Greater Boston region beginning next year. Now, many of our innovative tenants have set bold sustainability ambitions, with over 90% of our top 20 tenants by ARR having net zero carbon and or carbon neutrality goals in place.
The 15 Necco project for Eli Lilly, shown here, highlights this pioneering approach to laboratory building decarbonization, and here we're targeting a 96% reduction in CO2 emissions, among other key metrics. At 325 Binney Street, this the future home of Moderna. This next generation life science development project will simply transform the future of laboratory buildings. If we now turn our attention to the prioritization of water efficiency and note that cooling towers are often considered the largest consumer of water in a lab building, but at 325 Binney, this ground source system will significantly reduce cooling water tower consumption. At Alexandria, we regularly conduct technical assessments to identify opportunities for energy and water efficiency, and implement high impact conservation measures to reduce consumption across a variety of metrics. This could include smart meter readings, cooling tower upgrades, and other critical components of utilization.
Finally, as our tenants pursue this mission critical science for the betterment of humanity, we in turn are committed to ensuring that our facilities are similarly focused on humanity's future and stand by our comprehensive approach to sustainability and net zero emissions. So as we close this section, when you boil it all down, at the end of the day, health is really the most important thing to all of us. As evidenced by Steven Keating's video earlier, health is fragile, and it can really change in an instant. For me personally, this is why I've dedicated my career to working in the life sciences industry and for Alexandria. And this is what drives our tenants across the country, those currently conducting research in the floors above us.
It's what fuels the diverse and deep funding sources of our $5 trillion secularly growing industry, and it fuels Alexandria. It fuels us to support the pursuit of novel medicines for both current generations, future generations, you, me, and our families. And with that, I'll hand it back over to Dan Ryan.
Thank you, guys. That was excellent. We're gonna now cover probably the most, you know, the category that we've invested and have thought the most about, as in our investment thesis, which is our investment into the mega campuses around the country and our cluster markets. We essentially have three primary product types that we invest in. Integrated campuses that you see on the left-hand side are typically amenitized, you know, great locations, amazing design, but may fall short of the sort of a 1 million sq ft threshold that we think about when we talk about a mega campus. Distinctive assets are highly valuable assets that are, you know, robust, a solid design.
You can think of them as sort of a workhorse type of asset, but may or may not have Alexandria amenities on site or even in the area, or and may or may not be aggregated. So that's kinda of that, kinda of that bucket, those holdings bucket. We're gonna, of course, talk about mostly today, about the middle category, which is our mega campuses. So you can think about these as highest design, aggregation of 1 million sq ft or more at its full development potential. Generally highest rent achieving, and then the robust amenity programs, and generally convenient to transportation, and of course, that's market dependent. Why do we select the mega campuses as our outcome?
It's because we've seen over 30 years, as I mentioned earlier, we've been doing this, and we've seen that this is what people, this is what great life science companies want. They want to see the scale. They want to be able to enjoy the amenities so they can recruit, as I talked about earlier. And so this has become the... And we have great, you know, operational savings because we can have scale on these campuses. And all that flexibility and optionality is really what makes these, of course, the most exciting and the most desirable asset class that we invest in.
Joel mentioned this earlier, but I think this is an exciting thing to really think about for a second, that we can double our size with our current development potential on balance sheet, and most of that is in the mega campuses. So how does that come into play? It's because we can respond, really, to almost virtually any tenant inquiry. Depending on size, we can respond to big pharma on our campuses. We have, we have that great flexibility. And we have a built-in pipeline, and most of the development potential that you see on site here, or that you see on this slide, is entitled and shovel-ready.
So we can react in a, in kind of a, you know, it's... The tension in our business is that need for on-demand space, and the fact that we're in the real estate business, it takes a long time to build stuff. We've really tried to shrink that and use all of our skill to shrink that to the point where we can—we think we can deliver as quickly as possible. That's how we think about our development pipeline. We decided to share our secret formula, winning formula, for how we've become—how we've created our competitive advantage, because it's the holidays. You can write this down and run the math at home. It's pretty easy to understand.
You take the strategic locations, aggregate around them, add in, you know, 30 years of expertise, you sum that, and then you take the innovation to the nth power, and you multiply that by, of course, as I mentioned earlier, time. And the great news is what happens: You become the undisputed real estate leader in the world. So it's a very simple formula. I encourage you all to try it at home. And maybe you'll have people like Bristol-Myers Squibb, and Merck, and Lilly, and everyone else at your beck and call. So I thought I'd just sort of walk you through, just because I'm very familiar with it, when you think about what it means to put together a mega campus.
I think this is why we also view this as the most durable, most valuable, investment that we can make, is because it takes a long time to put this together. Starting in 2010, when Alexandria acquired 10,300 Campus Point Drive, which actually was an asset that I had worked on in my former company before I joined Alexandria. So I've been involved with it since 2007. We had positioned it for life science. It was acquired by Alexandria. And then over time, ending just last year, in 2022, we bought our last parcel in that 100-acre assemblage. So that's, you know, that's 15 years of time to put this together, you know?
And then you think, well, okay, now we're gonna build it to its full potential, so that's probably another five years. So that's 20 years of time. And that's the, you know. And so that's really when you. And you look at some of the stuff that occurred in Boston and Seattle and those assemblages, these are long, arduous things with that you have to be determined. You have to have, as Joel mentioned earlier, the, you know, the inclination to sell Mission Bay or to sell Binney Street, you know, and we think about this as a long-term march and to create the best assets. And at the end of the day, the mega campus is the most, the product that you cannot replicate.
I'm not gonna try irreplicable again, it's too hard. But you can't replicate that, and that's where we feel we have the best moat in our business plan. With that, I'm gonna turn this over to Hunter.
Thanks, Dan. My name is Hunter Kass, Co-President and Regional Market Director for Greater Boston. The Greater Boston portfolio has evolved since it started in 1997. Over the last 26 years, we have leveraged our cluster model and the five components of our competitive advantage algorithm, which Dan described earlier, to execute a thoughtful and disciplined growth strategy. Today, the team's collective efforts have delivered a portfolio of 18.4 million sq ft across operating, under construction, and future development or redevelopment assets. The operating portfolio of 10.5 million sq ft delivers annual rental revenue of $729 million and is clustered in five key markets: Cambridge, Watertown, Fenway, Waltham, and the Seaport. A common attribute for each market is the concept of a foundational mega campus, that at the time of its acquisition or delivery, was transformational to its ecosystem.
In 2006, the acquisition of Alexandria Technology Square set the foundation for our future growth as the first mega campus in Cambridge, located at the center of what many call the most innovative square mile on the planet. Over the last 17 years, the Cambridge portfolio has grown to over 5.5 million sq ft and includes two other mega campuses, Alexandria Center at Kendall Square and Alexandria Center at One Kendall Square. Alexandria Technology Square is superbly located proximate to the Red Line and directly adjacent to MIT's campus.
This 1.2 million sq ft mega campus across seven buildings has had a storied history and is now a diverse campus that has both research space for leading pharma companies, along with the MIT Institute for Nano Soldier Technologies, which is developing technologies to improve the protection, survivability, and mission capabilities of the U.S. Armed Services. Moving to Watertown. Ideally located 15 minutes from Kendall, with great access to public transportation and proximity to suburban executive talent, another foundational campus was created with the acquisition of Arsenal on the Charles in 2019. We leveraged Alexandria's long tenure in the market for over 20 years with 480 and 500 Arsenal. Our deep knowledge of the life science ecosystem and the robust infrastructure of the asset, which enabled us to deliver the 1.2 million sq ft Arsenal on the Charles mega campus.
The mega campus is over 200 years old, with a storied history that began as a munitions manufacturing complex, and ultimately into a research and testing laboratory for the U.S. Army. It now serves as a highly amenitized mega campus that supports life science research and manufacturing. Since the acquisition, our team was able to complete the entitlement on the site for life science conversion and development expansion. We have delivered more than 300,000 sq ft and are on path for another approximately 210,000 sq ft, with the deliveries of 500 North Beacon and 4 Kingsbury. I'll now pass it over to Jesse. There you go, bud.
Thanks, Hunter. Good morning. I'm Jesse Nelson, SVP, Regional Market Director, and along with my colleague, Monica Dean, co-lead our San Francisco Bay Area region. We are the partner of choice to the life science industry in the Bay Area, where over the last 27 years, we have created the region's highest quality portfolio of lab assets, totaling 13.9 million sq ft, including future development. We are laser focused on three cluster locations in the region: Mission Bay, South San Francisco, and Greater Stanford, because these are the most important locations for highly innovative science and for recruiting the best talent. We're going to look at two of our mega campuses in this region, first in South San Francisco and second in Greater Stanford.
South San Francisco is the birthplace of biotechnology, anchored by Genentech's sprawling 40-building campus, and also home to the densest concentration of life science companies anywhere in the Bay Area. Our operating assets in this cluster are primarily concentrated in three campuses shown here on the map, which are all very well located in the core, most desirable part of the cluster. This is the Alexandria Center for Advanced Technologies, South San Francisco, which is the new name for our 1 million sq ft mega campus located at 213-279 East Grand. This five-building campus is home to several highly innovative companies, including Merck's South San Francisco Discovery Hub and a really dynamic company called insitro. insitro is working at the intersection of biology and AI, developing novel therapeutics through the integration of predictive machine learning models.
We first became acquainted with Daphne Koller, the insitro Founder and CEO, when they were only a three-person company setting up shop at 279 East Grand. The company has grown substantially since then, now to more than 200 people, with important partnerships with both Gilead and BMS. We're focused on fostering the growth of disruptive companies like insitro, and over the next several years, we'll be making some really exciting enhancements to elevate both amenities and infrastructure at this campus to further transform it into a tremendous home for companies at the intersection of science and technology. Moving south down the peninsula, this is the Alexandria Center for Life Science, San Carlos, which is located about halfway between South San Francisco and Stanford University.
There's a lot of life science companies in this part of the peninsula, but historically, it's been a disaggregated cluster without a center of gravity, and with most inventory being pretty dated and not purpose-built. We saw a unique and highly differentiated opportunity in San Carlos to create a purpose-built innovation campus in a great location, with easy highway access and walkable to both Caltrain and the desirable restaurants and amenities of downtown San Carlos, shown on the left side of the screen. We completed the first phase of this Mega Campus in 2021 at 825 and 835 Industrial Road, on the right side of the screen. This 525,000 sq ft initial phase was 100% leased at delivery.
This campus has been a game changer for the greater Stanford cluster because of the combination of best-in-class essential lab space, great amenities, a compelling location, options for future growth, and the strength and expertise of the Alexandria brand. The Alexandria Center for Life Science, San Carlos, is the new center of gravity for greater Stanford life science, and we're excited to continue growing the campus to help our highly innovative tenants pursue their life-changing work. Now I'll hand it over to Dan to talk about San Diego.
Thank you, Jesse. That's great. So let me talk a little bit about San Diego. We have 7.9 million sq ft operating and another 1.2 million sq ft under development, which I'll talk about in a moment. San Diego is about 3.6 million people. Life science is probably one, if not the number two leading industry in San Diego. So it's as an influence, it's very significant in San Diego. And we are very significant in that life science area because we own about 50% of the leased lab space in Torrey Pines and UTC. So you can kind of think about it that, so goes Alexandria, so goes life science in San Diego.
We are the convener of all things San Diego, all things life science. We own, we know, we know virtually everybody, you know, essentially in town that's, that's relevant in the industry. And so we're really deeply, deeply connected and influential in San Diego. So it's a very different, very special relationship. Just like my colleagues here, I mean, we are very well connected politically. So it's a very special place, and it's, it's undergone a tremendous amount of growth in the past 10 years. Our under construction portfolio is simply amazing. We have-- We're building a 425,000 sq ft building suite for Bristol-Myers Squibb at Campus Point. We're building another 170,000 sq ft adjacent to that for Leidos.
We're under construction with our three-building phase five of One Alexandria Square that Hunter mentioned earlier. That'll be 340,000 sq ft, and we're building 245,000 sq ft at SD Tech. So, the way I think about this is that, you know, just think about One Alexandria Square. It's been 30 years in the making, and so each of these are really generational deliveries, and we're doing them all at the same time. So it's a terrific, exciting, fun, active time in San Diego. When you think about this 4 miles across that you see in this ellipse here. This is what we call the science sector.
It's really anchored by our world-class institutions in UC San Diego, the Scripps Research Institute, the Salk Institute, and Sanford Burnham Prebys Institutes. These are all very prolific institutions. UC San Diego was just recently ranked in the top 10 of biomedical research institutions in the world, and Scripps Institute was fifteenth. And these are prolific institutions. I mean, they... Joel kind of alluded to this earlier, but, you know, you're, you can talk to some of these institutions who are not necessarily used to transferring their commercial technology into spinning out into companies. So you may have great, you know, maybe somebody like a Vanderbilt. It's a great institution, but they do not have the experience of doing that.
These are very prolific, they're very used to doing it, so there's a great network of companies that come out of these institutions. The science sector is also really where all the amenities are, you know, all the highest amenities are in San Diego County. This is really our kind of downtown, when you think about it. It's where the highest density housing is, it's where the great schools are, it's where the great high-end retail is, the high-end hotels. It's the connection to the coastal San Diego, the Pacific Ocean. And so this is really where the heartbeat of all this is happening. We own, you know, and virtually we own the four major mega campuses here, and virtually all of our portfolio is located here in the science sector.
This is what you've heard about bits and pieces, and I'll kind of explain it to you in general, but we have, you know, 12 properties here in this One Alexandria, we'll call it One Alexandria Square. Thirty years in the making, as I mentioned, the phase five that you see in the foreground, the three buildings are 345,000 sq ft, anchored by Altos Labs. Just a terrific, I mean, amazing piece of real estate that Joel acquired in 1994, that I've had the privilege of, you know, of building on and taking something that we think will be timeless.
In fact, that's the way we thought about the architecture on this, was a timeless Salk Institute type of design, to really reinforce that this will be a generational asset and will be one of the cornerstone jewels of our portfolio. This Campus Point, I mentioned, I showed the timeline a little earlier. But really, when you look at the immensity and the power of the way we have been able to construct this 100 acres here, this will really be the street of dreams for life science real estate across the country. We have, as I mentioned, Bristol-Myers Squibb building 427,000 sq ft. We have Lilly on site for 300,000 sq ft. We have Novartis on site for over 100,000 sq ft.
We have UC San Diego. The list goes on. We have accelerator space in our GradLabs space. We have a whole variety of space that we can offer all the way up to 400,000 sq ft or 500,000 sq ft for big pharma. So this 2.8 million sq ft at full development is just gonna be probably the most impressive campus. I'm biased, obviously, but the most campus that we have in the company. So super enthusiastic for this. With that, I'll turn it over to my friend and colleague, Hart Cole.
Great. Thanks, Dan. Good morning, everyone. I'm excited to be here. I'm even more excited to bring my voice to me this year. My name is Hart Cole, SVP and Strategic Market Director, and along with my colleague, John Cox, have the honor of running the Greater Seattle region for Alexandria. Today, let's dive into a brief overview of the Pacific Northwest and our mega campuses there. Our Greater Seattle portfolio consists of two primary submarkets: Bothell, our suburban life science and biomanufacturing hub, and Seattle, with two of our premier mega campuses situated on the shores of Lake Union. Together, these submarkets total 2.8 million sq ft of operating and $111 million in annual rental revenue. The Greater Seattle market remains strong.
As significant advancements in cell therapy, immuno-oncology, and the growth of big data with AWS, Azure, and Google Cloud drive continual advancement in what we fondly call Cloud City. Located adjacent to preeminent leaders in research and innovation, including the Fred Hutch Cancer Center, the University of Washington research labs, Amazon, Microsoft, Google, and countless others, our Eastlake Life Science campus by Alexandria and our burgeoning Alexandria Center for Life Science, South Lake Union, mega campuses truly do sit at the intersection of science and technology. The Greater Seattle region, as talked about earlier, also has the ability to essentially double our irreplaceable Lake Union footprint with our future development, building out the balance of our ACLS SLU campus. The generational real estate shows the true power of the mega campus, as the growth of our tenants continue to drive scientific innovation in the Pacific Northwest and around the globe.
Zooming into the Eastlake Life Science campus by Alexandria, what began 20+ years ago with a single asset in 2003, now totals 1.2 million sq ft of operating real estate, with the addition of a fantastic new delivery of 1150 Eastlake, shown on the right-hand side of the slide. We'll talk about that a little later.
The highly leased campus is a microcosm of the broader life science ecosystem, bringing together research institutions like the UDub and Fred Hutch, large pharma such as Gilead and and Bristol-Myers, and new and exciting public and private biotech, such as Alpine Immune Sciences and Umoja Biopharma, as well as scientific incubation and risk capital to create the next generation of life science, life-changing treatments. Our only problem is we're out of space. Luckily, as mentioned earlier, we have the ability to double our capacity at ACLS SLU, helping to drive future ecosystem growth. With that, I'll hand it over to Peter to talk about Maryland.
Hey, everybody. My name's Peter Moglia. I can say irreplicable, so I am the CEO and Co-President. I mean, it really came down to that. I almost blew it when I said that, so it is hard to say. But I'm also the Chief Investment Officer. Been here 25 years, following this icon of the life science real estate industry. I'm very proud of everything that we're doing, and I talk a lot to all of you. Probably met with about 90% of you over the last few months, and it's good to see you, and I'm sure you're happy that I'm not really talking too much today. Let me get to this. Maryland is a very solid growth market today.
It's become a really large contributor to our leasing over the past 4.75 years, contributing 12% of our overall leasing, as opposed to 8.5% in the previous five-year period. And what's driving the strong performance? is a two-decade-long major transformation from a government-dominated cluster to a robust, highly diverse tenant base, inclusive of a mix of private biotech, public biopharma, large pharma companies, numerous CROs and CDMOs, and a growing list of international companies. It's really come a long way from being a sleepy submarket. This is the Alexandria Shady Grove Mega Campus.
Our presence in Shady Grove, which is in Rockville, is so dominant that the Montgomery County government enabled us to change the branding of the area from the Shady Grove Life Science Center to the Alexandria Center for Life Science, Shady Grove, complete with numerous large monument signs at each entrance to the area. I mean, it's quite amazing. The Shady Grove Life Science Center is the only mega campus in Maryland, and it's growing, with three active ground-up developments under construction, totaling 537,000 sq ft, which are a combined 93% pre-leased to a diverse mix of government, large and small biotech, and biopharma contract services companies, mirroring that diversity that I talked about at the beginning. So I will now send it back over to Hunter.
Thanks, Peter. In the Research Triangle, where we have been for 26 years, Alexandria is the dominant life science landlord. With a portfolio that leverages the market's diverse ecosystem of research across life science, ag tech, and advanced technologies. Today, the portfolio is more than 9 million sq ft across operating, under construction, and planned for development or redevelopment. The operating portfolio of 3.8 million sq ft delivers $115 million in annual rental revenue. The Research Triangle portfolio consists of approximately 40 properties across multiple campuses. We will focus on three: the Alexandria Center for Advanced Technologies, Alexandria Center for AgTech, and Alexandria Center for Life Science, Durham. I think I've said Alexandria Center maybe 50 x now, which is almost as challenging as saying [erupt goal one].
At the foundation of this market is an academic ecosystem anchored by Duke University, the University of North Carolina, and North Carolina State University. The depth of talent in Research Triangle continues to drive company formation and growth. In addition to their proximity to each other, the Alexandria Center for AgTech and the Alexandria Center for Advanced Technologies each house an Alexandria AscentLabs. Alexandria AscentLabs offers fast-growing life science companies, a world-class home base, and state-of-the-art amenities on Alexandria's premier campuses in the heart of Research Triangle's dense ag tech and life science cluster. In addition to supporting the early-stage companies in this ecosystem, we also support companies like NeoGenomics, which specializes in cancer, genetic testing, and information services, providing one of the most comprehensive oncology-focused testing menus in the world to help physicians diagnose and treat cancer.
NeoGenomics recently expanded with us in the region, signing a lease of Five Triangle Drive, another example of the power of our mega campus platform. In 2020, we acquired the 2.2 million sq ft, 15-property mega campus, Alexandria Center for Life Science, Durham. This was the largest acquisition for Alexandria in the region and delivers a collaborative, high-profile mega campus with scale and flexibility to support the growth of the Research Triangle innovation ecosystem. Located on this campus is the Duke Vaccine and Trials Unit of the Duke Human Vaccine Institute. This unit's mission is evaluating strategies for disease prevention, treatment, and control. We'll now take two seconds to flip people around, and Peter will take on the next section.
Everybody safely off? All right. Look, we've got a number of ways to grow FFO, both internally and externally, and through our unique business strategy, relationships, operational excellence, and our mega campus model, which we'll continue to talk about. There are also a number of ways we can fund this growth, and all of that is going to be covered in this section. Our business strategy makes us well positioned to achieve internal growth, but external growth is going to be driven by our highly differentiated mega campus model you've been hearing about, which also makes our asset base highly resilient to competitive supply. Self-funding this growth is an imperative under current market conditions, and we have multiple tools to tap, and I'll get into that a little bit later.
In the meantime, Onn and Marc are going to start with our multifaceted internal growth, and then I'm going to come back and lead off our external growth strategy. So take it away, Marc.
Thank you, Peter. Hello, everyone. My name is Marc Binda, CFO, and Treasurer, and I've been with the company for 19 years, and I'm very excited to be here with you today. I'm going to kick off by going through our resilient internal growth engine. Thank you. At the bedrock of our internal growth engine is a passion to partner in a unique way with the growing life science industry, and to help our tenants continue to accelerate the pace of innovation in a way that will ultimately address massive unmet medical needs for all humankind. We do this by attracting world-class tenants, providing large-scale collaborative environments with our Mega Campus strategy, and delivering critical operational support by our fully integrated teams at our highly complex laboratory facilities, which are mission critical to the success of our tenants.
Our differentiated strategy and intense focus on operational excellence drives stable cash flows from a high-quality tenant base and generates solid annual same-property growth. I'll hand it over to Onn to dive deeper on operational excellence and the rest of our internal growth engine.
Thank you, Marc. Good morning, everyone. My name is Onn Lee, EVP of Accounting. I joined Alexandria in 2009, and it's a pleasure to be here with you today. First, our strong internal growth engine starts with our best-in-class team. As a pioneering life science REIT with nearly 30 years of experience, our seasoned in-house asset management team has developed an unparalleled expertise of managing highly complex lab infrastructure. We have earned the trust of our tenants for providing safe, secure, and dependable operations that are essential for our tenants to advance life-changing innovations. Today, we are honored to be a partner to our high quality and diverse client base, an assemblage of relationships, many of which we have developed and foster over the last 3 decades.
These relationships have resulted in a deep reservoir of demand, with 80% of our leasing activity being generated from our existing tenants over the last 12 months. This is a key attribute to our solid and resilient leasing activity, even through various economic cycles. To showcase the strength of our high-quality cash flow, 91% of our top 20 tenants' annual rental revenue is generated from investment-grade or large-cap publicly traded companies. This is the highest percentage in the company's 30-year history. To further underscore our prudent tenant underwriting and the strength of our client base, our tenant collections have remained stable and consistent, with an impressive average rate of 99.8% collection since the beginning of 2021.
With the best real estate that uniquely combines scale, world-class design, and curated placemaking that activate the most productive spaces for our tenants, we have had over 80% tenant retention rate over the last five years. Our strong tenant retention rate has also translated into our ability to maintain high occupancy over a long period of time. Even during the Great Financial Crisis in 2008 and 2009, as you can see on the left side of the screen, we only had a 70 basis point decline in occupancy. And fast forward to today, as you can see on the right side of the slide, even with acquired vacancy of 3.2% since 2020, we have maintained solid occupancy, averaging just under 95%.
This is also a true testament to our team's discipline and focused execution and the result of our operational excellence. As a dominant life science real estate that is integral to our tenants' long-term business strategy, our properties generate long lease terms, with our weighted average lease term of 11 years this year, far surpasses our historical average of 8.7 years, which was already very strong. One of the most impactful results of our business strategy has been our ability to create a leading position for us to maintain solid rental rate growth. Even in the current macro environment backdrop, we have achieved 34% on a GAAP basis and 18% growth on a cash basis for lease renewals and releases through the third quarter of this year.
Our strong rental rate increase is a great indicator of how a world-class brand, highly desirable mega campuses, and our commitment to operational excellence continue to drive our solid and resilient internal growth performance. Now, I will turn it back to Marc, who will cover our favorable lease structure.
Thank you, Onn. So in addition to the strong rental rate increases that Onn mentioned, our favorable lease structure provides for contractual annual rent increases of approximately 3% per year and are contained in 96% of our leases. These contractual increases provide a path for steady growth of the annual cash flows. Our favorable lease structure also requires that tenants pay for all operating costs, including increases there, too, as well as capital expenditures for things like roofs, mechanical, and HVAC equipment, which would typically be borne by landlords. These provisions provide for a very resilient and steady cash flow stream and are included in most of our leases.
Our strategic lease structure, as well as the durable nature of our laboratory improvements, result in a very modest non-revenue enhancing capital expenditure number, which has averaged about 15% over the last six—or the last five years, and has trended even lower in the 12%-13% range over the last two years. As a reminder, this bucket of costs we're talking about here includes all capital expenditures not associated with development or first-time conversion of non-lab space to lab space through redevelopment. Tenant improvement allowances related to leases for renewals and re-leasing of space, which are included in non-revenue enhancing expenditures, continue to be very modest, ranging from $15-$30 per sq ft on average over the last five years. It really demonstrates the durable nature of our properties.
Contrary to some other property types, the capital in our second-generation leasing tends to be much less on average, as our typical, highly reusable lab space has been shown to last well beyond the initial lease term in most cases. Our favorable lease structure contributes to our strong adjusted EBITDA margin of 69%, which outpaces several other REIT sectors. Our G&A expense, which is reflected in our strong EBITDA margins, is also modest, at about 9.3% as a percentage of net operating income, and is expected to trend lower next year. Our mega campus strategy, world-class brands, operational excellence, solid life science fundamentals, and our favorable lease structure has translated into strong same-property net operating income growth in 2023 on a GAAP and cash basis, roughly in line with our ten-year historical average.
And if we take our historical 10-year average for cash same-property net operating income performance and compare that against other large sectors in the REIT space, you can see we've significantly outperformed, including about 180 basis points of outperformance against the industrial sector over the last 10 years. Stepping back and looking at total net operating income growth, we've had tremendous growth over the last 10 years, driven significantly by our resilient internal growth engine, as well as our significant external growth. And we're positioned well to continue that growth in NOI and cash flows with our 6.4 million sq ft of our current pipeline as of 3Q 2023, with 66% leases are negotiating. Next, I'll turn to lease expirations for next year.
Excluding lease expirations that are already leased or targeted for future development or redevelopment, we have a very manageable amount of space we need to resolve next year, of only 1.7 million sq ft or 4.9% of our total annual rental revenue. This next slide shows a breakout of our total our lease expirations for next year. In addition to a very manageable amount, which I described, of unresolved lease expirations of 1.7 million sq ft, which is located in the box on the right side, there's two other things to highlight on this slide.
First, starting at the grand total row in the middle column, we have 816,000 sq ft of lease expirations targeted for redevelopment next year, which includes 311 Arsenal Street in our Watertown mega campus, and our 269 East Grand property, which is located in one of our South San Francisco mega campuses that Jesse described. Importantly, both of these projects represent opportunities to convert non-lab space to lab space and enhance existing mega campuses. The second thing to highlight is moving one column over to the right, is we also have eight hundred and... Or sorry, 685,000 sq ft of lease expirations in 2024, which are related to covered land projects, which are expected to be taken out of service. These represent future development opportunities to enhance existing mega campuses in Cambridge, Torrey Pines, and UTC.
It's important to note that these development opportunities are subject to future market conditions and will require significant pre-construction work, including demolition of existing buildings, entitlement, and design, among other important requirements necessary for vertical construction. As a result, we don't expect to commence vertical construction on this bucket of lease expirations next year. So if we dive one step further into lease expirations for next year, and we take a look at our top 10 individual lease expirations, I'd like to draw your attention to the top row of this slide that highlights we have only one lease expiration exceeding 100,000 sq ft, and that space is located in our Mega Campus at Alexandria Technology Square in East Cambridge.
If that space did come back to us, we would expect significant interest in that space, given its excellent location on a mega campus, really in the heart of Kendall Square, and the premium that exists today for available just-in-time, built-out lab space. Next, I will turn it over to Peter Moglia, who will discuss our external growth engine.
Thanks, Marc. Our campuses are used in two distinct ways: to house the research operations of our tenants, but also to recruit and retain the best talent available from a very limited pool, which is why the scale and placemaking provided in our mega campuses is so important. In the life science business, many CEOs believe that they're going to grow quickly and exponentially if they meet their scientific milestones. So giving them visibility, a visible path to growth within our mega campuses, is a powerful motivator, among others, to lease space from us. In addition, they know that their company is only going to be as good as the people they can hire to advance their science, so they need to get the right people on the bus.
When they see the vibrant atmosphere created by our placemaking, it gives them the confidence that they can use our mega campuses as a powerful recruiting tool. Most of the competitive supply in the market today are one-off buildings. They can offer a place to put a company's operations, but they're going to fall very short of providing the scale and vibrancy placemaking that we have at our mega campuses. Our mega campuses provide a comprehensive solution to life science tenants, one that is significantly difficult to replicate given the time and capital needed to assemble them, as Dan went through. Our external growth strategy, therefore, is going to be targeted on creating new and enhancing existing mega campuses, as they are our best weapon against competitive supply.
The competitive supply I referenced has increased direct vacancy, and the tough funding environment has increased sublease vacancy to uncommon levels, to no surprise. These numbers that on the screen are from our proprietary databases, which are updated by our regional teams quarterly and reconciled with market data that our teams feel is the most reliable. We give very little weight to subscription services for this data because they are often very incomplete. As stated on our earnings calls, the supply numbers we report are based on what we deem to be competitive to our assets. The five key attributes presented in the middle are the filters we use to deem a property, a competitive property, competitive or not.
But a good way to think about it is that if a tenant is interested in an Alexandria building in an area, would that new supply be put on a tour list by their broker? If it would be, it's competitive. If it wouldn't be, then it's not. It's pretty simple. Based upon our data, 2024 appears to be the peak of unleased supply deliveries, and we don't expect much of any more spec development, given the oversupply dynamic and the fact that financing a new spec building today would be extremely difficult. We're very fortunate that the projects we have delivering in this competitive time are 92% leased, due in part because they're part of mega campuses, and also due to our disciplined approach of having at least some pre-leasing done before we go vertical.
As mentioned at the top of this section, our highly disciplined capital allocation strategy is going to be focused on enhancing and evolving our existing campuses and creating new ones. An example of a new mega campus we're creating, Dan profiled a little bit ago, is One Alexandria Square, also referred to today as OAS, which is in Torrey Pines. The name is a nod to our iconic One Kendall Square mega campus in Cambridge, because they both have a main and main location, and they're both the most in the most desirable submarkets of their respective clusters. Currently 75% pre-leased, this campus includes the renowned Alexandria Amenity Center, which I'm sure many of you have been to, but it also has plans of adding an amenity village to give it that vibrant, activated atmosphere I noted is so important to tenants for their recruiting.
During the year, we're going to be progressing on the enhancement of our Fenway campus in Greater Boston with the construction of 421 Park Avenue, a 660,000 sq ft ground-up development, which will combine with our 401 Park and 201 Brookline assets to bring this mega campus to 1.4 million sq ft. As mentioned recently on the earnings call, 421 Park is going to be anchored by Boston Children's Hospital, who purchased an interest in the building for their research activities, and they will become a great bedrock anchor to this ecosystem we're building in the Fenway. So I referenced this campus in the previous section.
Our mega campus at Shady Grove in Maryland is a great example why we strategically acquire properties, such as the ones that are noted on the dotted line, that are adjacent to our mega campuses and perform pre-construction activities to shorten the development timelines. Those activities make us more nimble and agile to capture opportunities when they present themselves, and that's exactly what happened here. While readying the site for development, we were able to capture two of the area's largest build-to-suit requirements in a decade, because essentially, we were ready to go vertical. Our last profile of investment in the mega campuses is the evolution of the previously mentioned One Kendall Square campus, which I might remind you, is one of three mega campuses Alexandria owns in Kendall Square, often referred to as the most innovative square mile on the planet.
We acquired it in 2016, with a plan to evolve the 645,000 sq ft former hose factory into a vibrant, modern mega campus. We've since made this a signature campus by thoughtfully investing in new amenities, wayfinding, and infrastructure to modernize and organize it, and then we added 399 Binney, which is in the upper right-hand side of the slide. Then the latest evolution of the campus is the addition of 325 Binney, which is on the bottom right corner, and Hart is gonna profile that in a moment. But those two buildings brought this to a 1.4 million sq ft mega campus size. The mega campus model is a true differentiator to one-off assets. It has widened our moat needed to mitigate the effects of oversupply that we're seeing in some of these markets.
Our investment into the assemblage, entitlement, and infrastructure of our mega campuses has prepared them to capture future opportunities and positioned us very well for future growth. I'm now gonna hand it over to Hart, and he'll profile our recent and future deliveries.
Great. Thanks, Peter. As Onn and Marc mentioned, our existing portfolio continues to drive our internal growth, while our highly pre-leased and visible development pipeline continues to drive our external growth engine, providing the next generation of essential life science infrastructure that our long-tenured tenants rely on for their vital research. As a result, over the next several years, Alexandria will be onboarding approximately $580 million in net operating income, a historic 29% increase to our 3Q 2023 annualized NOI. The 6.4 million sq ft pipeline is 66% pre-leased and negotiating. As you all know, our leasing historically accelerates as we approach delivery, most notably in the final year. To that end, it is important to note that a key hallmark of the Alexandria development pipeline is the high level of leasing completed prior to delivery.
Over the past 10 years, our projects have, on average, been delivered 95% leased. As you will see, our recently delivered projects are no different. These four major deliveries that we're about to look at represent 1.2 million sq ft and are 99% leased. Let's explore each one of them further. First up, a project that I am particularly proud of, 1150 Eastlake. Shout out to the Greater Seattle team for delivering this best-in-class, 311,000 sq ft project, 100% leased. The project, the capstone to the Eastlake Life Science Campus by Alexandria, with protected views of Lake Union and best-in-class amenities, is home to the next generation of leading Greater Seattle companies, reflecting the diversity of the Seattle ecosystem.
Next, moving to Cambridge in Greater Boston, is 325 Binney, located at the Alexandria Center at One Kendall Square mega campus. A huge coup by the Greater Boston team to deliver the 462,000 sq ft, 100% leased project early, providing access to the space for scientific research and commencing rental income even sooner than projected. As you all heard earlier, this project is also uber sustainable, targeting LEED Zero, and designed to be the most sustainable lab building in Cambridge. Staying in Greater Boston, but moving to the Seaport Innovation District, Alexandria is excited to announce the delivery of 15 Necco Street. The 345,000 sq ft project is delivering 97% lease to world-class pharma tenant, Eli Lilly.
Together with 325 Binney, these two projects will deliver a whopping $114 million of incremental NOI. Finally, we're proud to announce the delivery of 6040 George Watts Drive, Phase II in North Carolina. The 100% leased, 88,000 sq ft facility is an excellent example of why Alexandria's long-standing tenant relationships are so critical to future growth.
This relationship started over 20 years ago in 2002 with Diosynth and just 4,000 sq ft, and has now seen significant growth and credit enhancement via Diosynth's acquisition by Fujifilm, leading to growth of over 140,000 sq ft in RT, and has also expanded into other markets, most notably in Greater Boston. We look forward to working with this tenant for many years to come in multiple markets. As we look to the future of our mega campus portfolio, I will pass to Hunter to discuss our upcoming 2024 deliveries.
Thanks, Hart. Let's turn our attention to 24, where we are highlighting five exciting deliveries We will start with 201 Brookline, part of the Alexandria Center for Life Science Fenway mega campus, where the final deliveries will occur in early 2024 for this approximately 510,000 sq ft life science asset, targeting LEED Gold that is 98% leased to organizations such as the Wyss Institute and Boston Children's Hospital. Moving from the Fenway out to Route 128, where 840 Winter Street, part of our Alexandria Center for Life Science Waltham mega campus, will deliver approximately 140,000 sq ft and is 100% leased upon completion to Intellia, which is a leading clinical stage genome editing company focused on developing potentially curative, single-dose therapeutics, leveraging CRISPR-based technologies.
We are now on a plane, taking a trip to San Diego and our Campus Point by Alexandria mega campus, where the approximately 175,000 sq ft, 4155 Campus Point Court, is delivering 100% lease to Leidos, whose mission is to make the world safer, healthier, and more efficient through technology, engineering, and science. There's a short stay at the beach at Dan's house, and we'll be hopping on the redeye back east to discuss two deliveries in our Maryland region.
Starting with Alexandria Center for Life Science, Shady Grove, where 9810 and 9820 Darnestown Road, totaling approximately 440,000 sq ft, is delivering 100% leased and will be home to Horizon Therapeutics, which was acquired by Amgen in October, and MilliporeSigma, the U.S. and Canada-based unit of multinational pharma company, Merck KGaA. Finally, we have 9808 Medical Center Drive, where we are delivering approximately 68,000 sq ft that is currently 60% leased, anchored by the NIH, who has historically extended and expanded in our buildings over time. Our ability to deliver successful projects in 2023 and 2024 is a testament to the tremendous team we have here at Alexandria. We would like to thank everyone for their tireless efforts every day to deliver operational excellence. And now, back to you, Peter.
Thanks, Hunter. So certainly by now, you're convinced we've got great projects underway, but as all the meetings would always go, "Now, how are you going to pay for them?" And we're going to leave that a mystery. I'm not going to steal Marc's thunder. Got a lot of thunder ahead, but we wanted to give you guys a brief reminder of the tools we have to fund things in lieu of common equity. In 2023, we were challenged with a falling stock price, and it became an imperative that we fund our business in other ways, and we eliminated the issuance of common stock and pivoted to increasing funding from cash flows from operating activities, tapping EBITDA delivered during the year so we could debt fund on a leverage-neutral basis, and of course, reinvesting proceeds from our strategic asset sales.
The result is that we had no new issuances of stock in 2023, and we've now retained $100 million of forward equity issuances that we raised in 2022, which can provide us a cushion to meet our obligations if the tools are exhausted. We're a very seasoned issuer of bonds and can tap that market whenever appropriate. We've got a pretty great track record of finding the right windows to do so as well. Our significant cash flow growth over the last five years affords us significantly more cash after dividends to reinvest in our business. We've spent a decade vetting partners and building relationships with institutional investors that value our product type and our stewardship, resulting in a significant amount of capital raised through joint ventures.
Many of our partners have requested to do more with us, especially in the value- add spectrum, and we're currently contemplating launching a pooled JV structure that could provide multiple partners with such opportunities. It's only conceptual for now, but it's a great example of capital tools that we have yet to tap. With that, I'm going to hand it back to Hunter to discuss our dispositions, because he's done a really wonderful job of spearheading this funding tool.
Thanks. Peter outlined three out of the four self-funding tools, including leverage neutral debt, cash flow from operating activities, and joint ventures. In 2023, we will have $1.45 billion of total dispositions and partial interest sales. Of that $1.45 billion, 23% are comprised of strategic dispositions and partial interest sales, where our JV capital fundraising efforts have occurred. This is highlighted in the pie chart on the left in purple.... The balance of the capital was raised through outright sales of assets that are not integral to our mega campus strategy. When analyzing the profile of our capital raising efforts, you will see a balanced approach.
It includes reducing our land and non-income producing assets, along with operating assets that require capital to lease- up, and stabilized assets that have secured a strong average cash cap rate in today's environment of 6.4%. Of the $1.45 billion in strategic dispositions and partial interest sales, approximately $575 million is expected to close this December. More than 85% is under contract, and $423 million is secured by nonrefundable deposits. With the execution of these transactions, we still expect to achieve our guidance for net debt to adjusted EBITDA for the three months ending December 31st, 2023, annualized of 5.1x . The purpose of our self-funding tools is to provide the capital needed to execute our disciplined investment strategy.
Here on this slide, we are highlighting our Alexandria Center for Life Science Waltham mega campus. It is a great example of our strategy to transform the portfolio by selling one-off assets in order to support reinvesting into our mega campuses. Over approximately the last year, we executed two portfolio dispositions and a single asset outright sale in the suburbs that secured more than $700 million in gross aggregate proceeds and paved the way for the aggregation of a mega campus, consisting of 840 Winter Street and 35 Gatehouse, both 100% leased, and 40, 50, 60 Sylvan.
We have breaking news that we just executed an anchor lease for 165,000 sq ft. Due to confidentiality, we're not providing more details at this time. This is the mega campus that we know is poised to outperform the competition. I'll take a break, and I'll pass it over to Andres to discuss Alexandria's fortress balance sheet.
Thank you, Hunter. My name is Andres Gavinet, and I'm the Chief Accounting Officer of Alexandria since joining the company in 2012, and I'm very glad to be here. Before jumping into our discussion of our fortress balance sheet, this recent quote from Jamie Dimon seems appropriate, where Mr. Dimon acknowledges the importance of fortress principles, especially at a time such as now, where he notes the risks and the need to be prepared for a broad range of outcomes during a time that he notes may be one of the most uncertain moments that we have seen in decades.
An uncertain macro environment, such as the one that we're currently going through, is one of the reasons why, over the last 15 years, we embarked on a long 20-mile march, to borrow a concept from Jim Collins, to build a fortress balance sheet, with the intent to build strength and to be able to support our mission through challenging financial cycles. This 15-year transformation has been remarkable, as this slide illustrates, and we could not be more proud of this accomplishment.
With our liquidity increasing over 7 x since 2009, with our weighted average debt maturities increasing from an average of four years to one of the longest average debt maturities in the REIT sector at 13 years, with our, net operating income going from approximately half encumbered to 100% unencumbered, plus a significant increase in strength in each of our credit metrics. And looking at 2023 specifically, these were some of our key accomplishments this past year to continue to add to our balance sheet strength. Specifically, I will highlight a couple of, of items.
Now first, looking from the second item from the top, this past June, we leveraged on the great relationship with our banking group and the strength of our portfolio to achieve a $1 billion, or 25% increase to our revolver facility, making now our revolver one of the largest one in the REIT sector, while maintaining our existing borrowing costs and our overall maturity. In addition, looking at the fourth bullet from the top, this past February, we issued $1 billion in bonds at an average term of 21 years and a weighted average rate of 4.95%, a continuation of our disciplined funding strategy and execution, taking advantage of a very brief, favorable bond market. And so with our expanded revolver facility, our total liquidity currently stands at approximately $5.9 billion, one of the highest levels in our history.
To put our liquidity into some context, it currently represents approximately a remarkable 20% of our total market capitalization. We continue to be pleased with our strong credit ratings, which are keeping us in the top 10% among all publicly traded U.S. REITs, with our current outstanding bonds trading in the secondary market inside of this top 10% level, a great relative cost of capital advantage. Turning to our leverage and our fixed charge ratios, they continue to be strong and steady, with a forecasted leverage of 5.1x on an annualized basis for 4Q 2023, which should allow us to remain at the lowest leverage level in company history as we get into 2024.
Now, one of the key strategies that we consistently employed during the era of low interest rates that we had until not too long ago, was to significantly extend our debt maturities. Going back to 2019 until earlier this year, a time when we issued almost 80% of, of our total bonds outstanding, our bond issuances averaged 18.6 years of term at an average rate of 3.5%, taking great advantage of low interest rates that we are unlikely to see again for a while. We have focused our debt funding over a number of years to not only extend our maturity profile, but also to have a heavy emphasis on fixed rate debt.
So this approach of issuing long-term bonds has left us currently with 99% of our total debt as fixed rate debt, a remarkable result of our consistent debt funding approach. And now, looking at our entire, debt maturity timeline, this well ladder stack of traditional bonds in blue and green bonds in green, is the result of our work over the last 15 years, with currently no debt maturities prior to April of 2025. As you will see on the left side of the graph, with 30% of our maturities on the box on the right, having been pushed to the middle of the century, expiring in 2049 or beyond, and with our largest maturity in 2030, representing only 10% of our total debt outstanding.
Zooming in over the next five years to see what we will have to refinance in the next few years, you will see that our maturities represent only 19% of our total debt, putting us in an exceptional position to not have to finance much of our existing debt for years to come, allowing us to continue to benefit from the recent historic low interest rates. Not to belabor the point, but our 13-year weighted average debt maturity is seven years longer than the average debt maturity reported by other S&P 500 REITs, and over three years longer than the next longest reported S&P 500 REIT.
So having prudently achieved our current financial strengths, as indicated by each of our current metrics, we will continue to remain vigilant on building and maintaining our liquidity and financial wherewithal to give us resiliency and optionality as we head into 2024. For this reason, as we head into this uncertain macro environment, we're very pleased to have this fortress balance sheet to help us to continue our pioneering business model, supporting the life science industry. And with that, I'll turn it over to Marc to take us through guidance.
Thank you, Andres. I hope you're all ready to go through guidance for 2024. Before we do that, I am actually going to cover a few updates for 2023, which was included in the 8-K that we filed this morning. The updates for 2023 guidance are shown on this slide and primarily relate to sources and uses. The key update is a reduction in our target for dispositions and sales of partial interest for 2023, by $200 million at the midpoint, with the majority of this deferred to next year. Importantly, as Hunter had mentioned, we still remain on track to achieve our leverage goal of 5.1x for net debt to adjusted EBITDA, and preferred stock for 4Q 2023.
Also, I'd like to highlight that we haven't made any changes to FFO for 2023, or any operational metrics from our last guidance at 3Q or 3Q earnings, other than occupancy, which still remains in the range that we provided at 3Q, but is now expected to be on the low end of that range. So now, I am going to turn to 2024 for real, and I'm ready to give you a first glimpse at our solid outlook for next year. Earlier in the presentation, we discussed how our differentiated business strategy and disciplined execution has generated strong historical results. I'm excited to share our impressive outlook for next year, which continues to be driven by our premier brand loyalty and our scale advantage with our mega campus strategy.
So now, where the rubber meets the road, we're ready to unveil our outlook for next year. Our guidance for 2024 includes EPS of $3.59 at the midpoint, and funds from operations per share from $9.37-$9.57, which is $9.47 at the midpoint. Our FFO guidance for 2024 is in line with consensus and represents a 5.5% increase over the midpoint of our guidance for 2023. Our FFO per share guidance for 2024, of 5.5% growth over 2023, builds off a very impressive trend of strong FFO per share results since 2013, which has averaged about 7% per year over that period. Importantly, we recognize that 5.5% growth in FFO per share represents strong results in light of the challenging macroeconomic backdrop.
Our quarterly FFO per share results over the last seven years just absolutely highlights the tremendous focus on execution quarter to quarter by our seasoned team. The strong and consistently growing historical FFO per share results have been driven by growth in net operating income from our internal and our external growth engines, and we're well positioned with $580 million of future annual NOI expected to commence through 3Q 2026, from our highly leased 6.4 million sq ft of projects under construction or expected to commence construction within the next three quarters. We expect solid same-property NOI growth for next year of 0.5%-2.5% on a GAAP basis, and 3%-5% on a cash basis.
Similar to 4Q 2023 results, which I had highlighted on our last earnings call, I do expect the first half of 2024 to be impacted by some temporary vacancy, with stronger overall results expected in the back half of 2024. Our strong same-property NOI growth results stand out amongst healthcare REITs and other REITs that own life science space. For the most recent five-year period, including estimates for 2024, our cash same-property results highlight our resilient year-after-year growth in cash flows, averaging 6.2% on a cash basis per annum. We expect demand for our life science space to translate into solid rental rate increases on renewals and re-leasing of space, of 11%-19% and 5%-13% on a cash basis.
As a reminder, growth from rental rate increases on leasing can be somewhat volatile from quarter to quarter and year to year, depending upon the specific lease expirations. In certain cases, large leases can have a significant impact on the stat for any particular quarter. Turning to occupancy, we expect solid occupancy for 2024. The consistency of our high level of occupancy really stands out within the REIT industry today, with many REITs dealing with either significant volatility in occupancy or NOI. So as you've heard throughout this presentation, we have one of the highest tenant rosters in the industry, with a significant number of life science relationships. They're really generating an organic pool of demand that seeks out our brand, our expertise, and our operational excellence. And this continues to drive our outlook for continued high and stable occupancy next year.
It's also important to note that we do expect to be on the lower end of guidance for 2023, which I'd mentioned earlier, at 94.6-95.6. So the midpoint of our guidance for 2024, of 95.1, does imply some expected growth in occupancy by the end of 2024, with most of that coming in the back half of 2024. We remain focused and disciplined to execute on our operational excellence strategy. Part of that strategy is to ensure that we continue to invest in our deep and talented team. G&A, as a percentage of NOI, is expected to decline to the 8%-9% range next year, and this ratio is in line or better than several other REIT sectors, as you can see on the right side of that slide.
Alexandria's venture investment strategy is really there because it provides valuable insights into the life science industry trends and all the demand drivers, which helps us with our tenant selection. It also provides significant realized gains, which have averaged approximately $25 million per quarter over the last eight quarters. Our outlook for 2024 includes a slight increase to this run rate at $27.5 million per quarter. Our outlook for next year reflects a slightly more optimistic view that valuations may be closer to the bottom today, and we still see significant embedded value in our private investments, which have historically driven a significant amount of our total realized gains, including FFO, particularly over the last three years. I'll turn next to interest expense and capitalized interest. Interest expense is up significantly in 2024, driven primarily by three items.
First, there's a tremendous amount of EBITDA coming online in Q4 2023 through the end of 2024 from deliveries of our projects. This allows us to fund a significant amount of our growth capital needs next year, with debt on a leverage-neutral basis. So that's one. Second, we do expect an overall increase in our weighted average cost of debt, as both long-term permanent debt and short-term borrowings next year are likely to exceed our current weighted average interest rate of 3.7%. And thirdly, we expect our significant and highly leased pipeline deliveries in the fourth quarter of 2023 to drive an overall decline in the average cost basis, subject to capitalization of interest in 2024 compared to 2023. We'll turn to capitalized interest.
The midpoint of our guidance for capitalized interest for 2024 is $340 million, and implies a decline of about 4% compared to the midpoint of 2023. The key takeaway on capitalized interest is that with deliveries of significant development and redevelopment projects, particularly in late 2023, the basis placed into service is expected to outpace construction spending for 2023, and therefore, we expect a net decline in the average basis being capitalized headed into 2024. For example, two of the projects we delivered in November 2023 at 325 Binney and 15 Necco will generate, as Hart said, $114 million of NOI.
But importantly for this discussion, they'll result in a $1.5 billion amount of cost basis coming out of CIP and being placed into service and no longer subject to capitalization. While the cost basis of projects placed into service from our development and redevelopment projects is expected to exceed construction spend in 2023, we expect 2024 to be roughly neutral between deliveries and construction spending. Given the heavy deliveries in the latter half of 2023, and in particular, the back half of 2023, we expect this to drive an overall decline in the average basis capitalized from 2023 to 2024 at the midpoint of our guidance range. The next slide provides a visual and a high-level summary of the key drivers of the overall 4% decline that I described in capitalized interest from 2023 to 2024 at the midpoint of our guidance range.
We sliced it into two components. First, on the left side, the significant development project deliveries I mentioned that are delivering in the second half of 2023 are expected to reduce the base summer capitalization in 2024, and that will result in a decline of 10%, a net reduction to capitalized interest, even after considering the additional construction spending we need to spend. Second, on the right, we expect a partial offset from an increase in our weighted average interest rate, which I previously described. That is expected to drive a 6% increase in capitalized interest in 2024. So two additional items to point out on capitalized interest for 2024. First, starting on the left side, 37% relates to our active construction projects that are expected to generate significant near-term NOI.
And then second, on the right side, about half of our cap interest relates to our pursuit of requirements necessary to maximize the long-term value of our assets through pre-construction activities. These include things like entitlement, design, environmental impact, site work, all of which add significant value, and importantly, reduce the time from vertical above ground construction to delivery of completed space to a tenant. Our investment in in future pipeline requirements necessary to maximize long-term value, provide significant opportunities to generate future revenue and to nearly double the size of the company, the assets that we have on balance sheet today, with about 68% of those in our pipeline representing assets in existing mega campuses.
A good example of our value or our valuable mega campus future projects undergoing important multi-year preconstruction activities to address necessary requirements to maximize the long-term value is our Alexandria Center for Advanced Technologies at Tanforan, which is located near South San Francisco. This 1.9 million sq ft project is a great example of how our mega campus sites can require a lengthy preconstruction period, executed by our deep and talented team, to completely reimagine the site, which today is an existing shopping mall. The long-term potential for this site is tremendous, with fantastic access to multiple transit options, including two freeways, the BART, and the Caltrain.
Turning next to balance sheet and funding for 2024, we remain focused on the completion of our 6.4 million sq ft of development and redevelopment projects, which are 66% leased or negotiating, and we expect to self-fund through net cash provided by operating activities after dividends, leverage neutral incremental debt, JV capital, and dispositions. We remain focused on maintaining our fortress balance sheet with significant liquidity, low leverage, and of course, very strong corporate credit ratings, which rank in the top 10% among all publicly traded U.S. REITs. We're committed to strong fixed charges and leverage for next year, and our outlook assumes leverage consistent with 2023, at or less than 5.1x for 4Q 2024.
We have significantly reduced our overall annual capital plan for next year at $2.75 billion at the midpoint, which is down about $400 million from 2023. Construction spending specifically, is significantly reduced to $2.3 billion next year, which is down about $700 million from the previous year. Our outlook for 2024 construction spending includes two key categories of spend. First, on the left side, this is primarily focused on lease commitments on the pipeline that are expected to generate $580 million of incremental annual NOI. The right side is focused on important requirements to maximize long-term value through pre-construction consisting of entitlement design and site work, among others. Importantly, again, these efforts are focused on reducing the time to deliver space to tenants.
Our current consolidated JV partners have commitments to provide equity capital that will be there to fund future construction spending over the next three years, aggregating $1.2 billion, including $400 million in 2024. It's important to note that our guidance for sources and uses reflects our share of construction spending, net of these anticipated contributions by our existing consolidated joint venture partners. Similar to the significant decline in the use of the capital in 2024 compared to 2023, we also expect a significant decline in required sources of capital next year at $2.75 billion. The significant growth in EBITDA coming online from the delivery of our development and redevelopment projects, including projects that delivered mid-quarter in 4Q 2023, like 15 Necco and 325 Binney.
Those will have a pro rata benefit to 2024 EBITDA since they were delivered mid-quarter. So with that, we expect to be able to fund a significant portion of our growth capital needs next year with debt capital on a leverage-neutral basis. We expect incremental debt of $775 million, and we expect a bond issuance of $900 million at the midpoint of our guidance range, all on a leverage-neutral basis to support our growth. We also expect to execute on a self-funding strategy next year, with important sources of capital coming from operating, operating activities after dividends and dispositions and partial interest sales. Cash flows from operating activities and dividends continues to be significant, and we expect a $25 million increase in retained cash flows that can be reinvested, at $450 million for next year.
Turning next to the dividend policy. Our board of directors have been consistent with our dividend policy, focusing on sharing strong cash flows from operating activities with our stockholders. We've also maintained a very conservative and consistent FFO payout ratio that continues to allow Alexandria to maintain significant cash flows from operations for reinvestment in the business. Similar to 2023, we expect to pursue this self-funding model through real estate dispositions and partial interest sales. As we've done in the past, we continue to consider opportunities for both outright sales as well as partial interest sales, and this mix could certainly change from 2023, which was heavily focused towards outright sales. For those sales targeted for outright disposition, we expect to target properties not integral to the mega campus strategy, while joint venture opportunities will likely be more focused on core assets.
I'm going to quote Jim Collins, "Alexandria has achieved the three outputs that define a great company: superior results, distinctive impact, and lasting endurance." Alexandria continues to be flexible and adaptive, even in these tough macroeconomic times, by adopting a self-funding approach and continuing to build our brand, operational excellence, and our scale advantage through our mega campus strategy, all while delivering solid FFO per share results of 5.5% for next year.
I want to thank everyone for attending here in person and, all those attending virtually, and I'll hand it over to you, Joel. Okay, so that does it for the formal. We're going to move to Q&A. And, so open it up for a few minutes before we close things down and then go to a thought leadership program. Please.
Hey, sorry about that. Sticking with the developments, can you talk about how yield requirements on some of these projects are changing with the higher cost of capital?
Sure. Peter, you want to?
Yeah, and obviously, we're going to want to push those yields up over time. It's not going to be instantaneous. We'll probably have a lower spread between going in and going out at first, but we will look at the long-term IRR of the project, and if it—if that unlevered IRR exceeds our cost of capital, that it's a good signal to go. And remember that our, you know, leases do have 3% annual increases. So something that might not have a big spread over going in and going out initially, will build over time and go quickly.
Steve?
Yeah, thanks. Two quick questions. Can you just discuss a little more the dispositions and kind of the market environment today? And I guess, what's embedded within the FFO guidance, maybe a range of cap rates? And on that $900 million mark of bonds, like, any sort of sense of range on pricing for that? Thanks.
I'll start with cap rates. So we kind of bifurcate our asset sales into two pieces, the core partial interest sales that we do with our institutional investors, and then the whole asset sales of what we are today looking at disposing of what we call the one-off assets as we go into our mega campus strategy. The institutional partners do realize that these great assets, meaning the main and main locations where we're selling parts of the asset, do have enduring long-term value. So they're willing to pay a fair price that's not necessarily reflective of where interest rates are today, but are looking for, you know, long-term appreciation and accelerated depreciation, I'm sorry, appreciation versus, you know, another type of common asset.
The asset sales that we're doing in whole are definitely being influenced by interest rates today because those buyers are, by and large, levered, and we are looking at a floor essentially of where interest rates are today. The good news is that you can get financing for an acquisition for a lab building today, and it is in a single-digit rate. So, you know, think of something in the 7%-8% range today versus what if you tried to sell an office asset today, you'd be in the 10%-11% range. So we're, there's still great value, but as we're selling these one-off assets, unfortunately, the value of the assets is being influenced by rates. As they come down, if they do, we do expect that the asset values will follow by going up.
But, you know, you got to remember that the majority of our assets are core assets that we can, you know, sell without that floor of cap rates provided by the rate today, because the institutional investors will look at the long-term enduring value and not necessarily focus on the leverage rates. The assets still remain attractive, scarce assets. You want to comment, Marc, on interest rates on potential bond offerings?
Yeah. I think Steve, to answer your question, ten-year money in the bond market is around 6% today, maybe a little under that, but we tend to be a little bit more conservative in terms of our guidance, so that ought to give you a sense.
Rich? Yep, Tony.
Thanks. Your leasing spreads for 2024, about 9% on a cash basis. If I recall, I think your mark-to-market portfolio-wide was a bit higher. So can you comment how much of that is mix versus market rents having perhaps declined?
Yeah. So let me maybe frame it, and then I'll kick it to Marc, and certainly Peter can comment. You have to remember, the 18% is portfolio wide, and that still is true. It's the unique mix of assets that are coming up, you know, leases to roll for 2024 that influences that number. Marc, any other comments?
Yeah, just a reminder, we've got about 5% of our leases to resolve next year in terms of ARR, so it's a relatively small mix. And as we've seen even throughout the year, from quarter to quarter, you know, the leasing activity can be driven by different markets. It just really depends on which leases are rolling. But 18% is still a good number.
Next question. Yep, please.
Thank you. I just wanted to ask about the occupancy guide. Can you just help us think through contemplating what's baked in in terms of vacancy leasing, and then also how we should think about just the degree of conservatism that's built into that for 2024?
Yeah. So, you know, we expect to finish 2023 on the low end of the range, or the low end of the range. That range was 94.6 on the low end. The midpoint was 95.1, so somewhere in between there, and the midpoint of our guidance for next year is 95.1. So, there's some growth in there, but it's not a tremendous amount of uptick in terms of occupancy that we expect from year to year, year-end to year-end. So what that leaves you with is a little bit of lease- up by vacancy, but really resolving our lease rolls for next year, which are pretty manageable. I think we said it was about 1.7 million sq ft to resolve in terms of lease expirations.
But we're trying to be careful and prudent as, you know, we give the guidance. Yeah, Rich.
So, the conventional wisdom is 50/50 office to lab build out in your buildings. Is there anything magical about that going forward, and can you see that ratio changing, you know, with the talk about work from home and all that, all that noise? And within your portfolio, could there be a redevelopment option, or repurposing option where you can take an existing building that's 50/50 and make it 30/70? Is that sort of part of your game plan at any level at this point?
So I'll ask Hallie to comment, and certainly Dan and Peter and Hunter, anybody can weigh in. I think you have to, well, go back to what you see in corporate America, and certainly in Big Tech , and I see Tom Grier back there, and, you know, Jamie has everybody in five days a week, right? I think Amazon just announced, Andy... Say again? Oh, sorry. That's true. We're 25/7. But I think, you know, Andy Jassy just announced, I think, at Amazon, you all know, and other companies, that if you're not back in the office, it's going to weigh on your future ability to rise in the ranks and compensation is going to be weighed.
So I think over a period of time, the work from home will become, I mean, Peter's been the most vocal champion of that, will be much more moderated. So kind of as a broad sense, I mean, our tenants have been in, you know, through the pandemic, actually, certainly those that were mandated to be—I mean, were allowed to be in by mandate. So, but I think today on the generally lab space versus adjacent non-technical space, do you want to talk about the percentages and the what we see maybe the future might be over the next, say, short handful of years? I don't think we want to predict 20 or 30 years out, but.
Yeah, I mean, so I think Hunter described it best. It's the science that dictates that ratio versus this specific day-to-day kind of in and out of the lab and adjacent non-technical space. You know, we have conversations when we have companies coming in on what their space needs are. We had those conversations in the peak of COVID, and Dan can speak to this, you know, for example, our lease with BMS. You know, the ratios weren't shifting significantly, and when we have conversations on the ground with tenants on what their needs are, we haven't seen a noticeable shift. Those ratios are holding. To your point, if there was a demand changing for that, we would have heard it, and we do have ways to respond to it, but it's just not what we're hearing from tenants on the ground.
Yeah, that's right. We haven't seen a whole lot. We haven't seen any change in the demand for 50/50, and we sort of like to push in that direction when we build our spaces.
Yeah, and let me point to those people that can look up in the supplemental. It's Roman numeral 23. We did a study of taking all of all the space that is up for renewal from 2019 through 20, through year to date, 2023. And we said, okay, well, how much of that space re-leased? And on or not even re-leased, renewed. And you would think that if work from home was going to heavily impact the space footprint of a tenant, then we would see that percentage go from 100 to 70, 80. But if you look at the supplemental data that we put up, it goes from 2019 through year-end 2023, it's well above 100%. What that says is that tenants are not only keeping their footprint, but becoming bigger overall as they renew.
Yeah, remember what was mentioned earlier, you're not going to cure cancer from the couch. And, it's pretty clear that, you know, and Dan and the, you know, big BMS project down in, San Diego, as an example, their G&A is handled in New Jersey. This is heavy research, and it's got technical space and non-technical space. And Hunter walked you through kind of how that flows day by day, hour by hour, and that, you know, is not changing. I mean, that is what's happening.
Most companies, even smaller and medium-sized companies, the percentage of their G&A is actually pretty small, and no company is going to put, you know, their management—I mean, there may be one or two, but no normal, I would say, company on an accelerated or strong growth path or who's in the R&D phase, is going to put their senior executives somewhere outside of, you know, the core research. It just doesn't work that way. The whole concept of clustering in this industry is not only keeping companies and the ecosystem in close proximity, and these guys walked you through all the, you know, the markets and the mega campuses, but it's true of the workforce.
So that notion that was kind of fostered back in you know certainly the application of office to lab was done by somebody who actually called this company in 1997 a company that probably would not be able to you know survive because the belief was every time a company would move out of space you'd have to tear all the lab space out and rebuild all of it. That just isn't true. It's false. Period. Yep.
Thank you. Appreciate the color on supply growth, competitive supply growth over the next year. But correct me if I'm wrong, but, so most of that supply growth comes online through the latter half of 2024 into 2025. So with that assumption in mind, is it reasonable to assume that asking rent and NOI performance has already bottomed for this cycle, or could there be more fluctuation as we approach the end of 2024?
So what we're seeing, and we saw it a lot actually during the financial crisis, is that our rental rates have remained stable. The competitive supply is influencing concessions. So we're, you know, I've talked to you a lot about this, but the great example is... And remember, competitive supply is new assets that are going to be delivered in shell construction and are going to offer a TI allowance. And you know, that's going to compete with the 2 million sq ft that we have left available in our development pipeline, not necessarily the 40 million sq ft that we have in operation. So we need to make sure we have that context. But the TI allowance for a shell space-... was $200 a foot. That was, like, on average, right?
You know, certain lower, in certain places, higher in certain places. That is now $300 a foot. So I'm not saying it's minimal. I mean, it's, that's a, you know, fairly large increase. But, you know, the good news is that money gets invested into the building and, you know, we, you know, we keep hold of that real estate, and we can recycle it to the next tenant. Free rent is going up a little bit as well. And in our operating portfolio, as things roll over, there's a little bit more free rent. But overall, considering the amount of supply that's hitting, I think our fundamentals have held up really well.
I think that's why we wanted to emphasize the advantages our mega campus model has, because, you know, I mentioned the recruiting tool that our buildings are. And it's such a limited talent pool that if you're going after somebody who. There may be, like, three people in the U.S. that have this type of specialty, and you have to get one of them. You know, if you're in some tertiary area in a common, you know, commodity building, you're not gonna get that person. You wanna, you wanna recruit to a very vibrant place, great aesthetic design, and that is very important. And that's why rental rates hold. That's why our fundamentals are gonna hold, because there's very limited amount of mega campus space in the United States, and we hold almost all of it.
So a good example is sitting here in New York City. So as tenants are created here in New York, which is an early stage market, and they look for space, or recently, there was an out-of-state requirement for a nonprofit to look for space. Would you rather be at the Alexandria Center for Life Science here? Or there is a building up in Harlem that sits empty. It's kind of a lab-ready shell. Do you wanna be in that building and be kind of the only tenant there, or do you wanna be, and you're in the biotech industry, or do you wanna be in the middle of a vibrant location on a campus that has a, you know, 15-year track record?
Hands down, that building sits empty, and, you know, there are some folks in this audience that may have financed it, it's gonna go south there pretty quickly, foolishly. But I mean, that's a good example. That's supply, you know? I don't know, John, it's what, two... How big is that building? 350, and I don't think it'll ever see a life science tenant.
It's at least been three years since it's been available.
Right.
And 100% empty. So, and there's gonna be a lot of projects like that, by the way, that are in these supply numbers, that who knows what's gonna happen to them, but they're just in the wrong place. This industry wants to be together. And the other thing, folks, is that it's not a price-sensitive industry. I mean, people, the companies are, are, you know, they're, they're going to be very diligent with their funds. But as a percentage of their overall cost structure, rent is very low. I mean, for a big pharma company, it's between 0.5% and 1%. For a mid-cap company, it's about 4%-6% of their total cost. They spend an inordinate, inordinate, that's a word I can't say, amount of money on talent.
I mean, it's, I think, Hallie, it was somewhere between 50%-75% of the cost structure is people, right? And I just talked about, you gotta get the best people. So are you going to take the chance of leasing some building in a tertiary market and not get those people? Or are you gonna be in a vibrant area? And by the way, as I said, too, every CEO that leases 50,000 sq ft thinks they need 200 in two years. They're really worried about making a commitment, if there's no expansion in the building. So if you can point them to, "This is how you can grow in the same location," and then give them a recruiting tool, such as a vibrant atmosphere, and with the placemaking we create, we win all the time, and we do win all the time.
Over here.
Thanks. I know you most recently expanded into Texas. I'm curious if there are any other markets that you would consider for future market expansion? And when evaluating a market, what makes one more attractive than the other for expansion?
Yeah. So just remember the Medallion. We started with that, and that's our North Star today. You gotta have a vibrant location, you gotta have technology, right? You gotta have a talent pool, and you gotta have risk capital. I think if you look at Texas, and you look at Houston, Austin, Dallas, kind of that triangle, and you look at... I mean, hopefully, it won't change, but you look at governance, tax structure, where young people wanna be, the attraction of a lot of businesses. Texas, not today, but over the next decade, is somewhat like we saw in New York, what I saw, and I started here in 2001, when we, Sandy Weill put together the first bioscience task force. There were two commercial companies in New York at that time, nothing else. A lot of institutions, but nothing.
As much capital that was in New York, zero was going into venture here. So we see the same construct in Texas over a decade or more, and what's happening there is exciting. I think there's a small handful of other markets, but very few markets have the potential to grow those four critical elements that you really need to make a, you know, a real legitimate market. And, you know, we just Hallie just was involved in moving Dan, a company out of Philadelphia into San Diego. And the problem is, you can start in Philly. There's a lot of, you know, nice infrastructure. We passed on that market, I've said numerous times. High payroll tax, it's a tough governance market. You know, it's just not a market we saw that would be a long-term, exciting market to scale in.
And so this company, which is now scaling, just moved to San Diego. They started in Philly, but you can't scale. The talent isn't there, and really, there's limited technology and innovation. You got UPenn, but, you know, that's kind of it. So I think you have to look at those markets pretty carefully. But I think in this milieu, the one we're in now, we're really focused on, you know, preserve the core and do a great job at what we're doing right now. And any markets of the future really are decade-long marches, if you will. There's a couple more questions. The gentleman over there.
Thank you. During the pandemic, it was, again, the COVID vaccines that drove a lot of demand from, you know, for patient companies like Moderna. You know, right now, everyone's talking about the GLP-1 drugs potentially driving demand. I'm curious, as you look out over the next two to three years, what are you watching in regards to new drug discoveries that could potentially drive more demand?
That's a great question. I'll let Hallie speak to it, but let me maybe frame it. If you think about what she said earlier, the ascent of people with dementia, mental illness, potential Alzheimer's, and a lot of companies working, that's the market that is really almost unlimited when you look at not only the U.S., but the planet. I mean, and the aging of the population is pretty dramatic if you look at, aging over the next, say, two decades. To me, that's probably the biggest next frontier. But Hallie, you're the scientist.
I, I agree with that. I think also the healthcare costs associated with dementia and aging in terms of, healthcare, societal burden are huge, and so there's a lot of opportunity. And then the-
The therapies have a chance to save massive costs. That's the positive equation for the industry.
Yeah, but, you know, I actually may leave that to our next conversation-
Yeah, there you go.
because we have the CFO of Eli Lilly here.
Yeah, we got to move because he has a time deadline. So-
Yeah.
Sorry about that, Dan. So we'll take if there's any more questions. Yeah, go ahead, Jamie.
So I think for your 2024 [audio distortion].
Jamie, if you mind, it's on the webcast, so people-
I was trying to get it under the wire. You show, I think, 21% of your 24 expirations going into redevelopment or some other, well, bucket.
A number of projects are going into redevelopment, a big one in Arsenal, I believe. Here in New York, we have the Pfizer building. When Pfizer exits this year, that's a pretty big building. And then Dan has Leidos moving out for their build-to-suit . So it's a small handful of fairly big projects that we have to... You know, the Pfizer building is pure office. Same in, I think, Watertown and Leidos is the same thing. So these are all, you know, buildings that will be rehabbed or rebuilt for, you know, labs and so forth so.
Great locations, by the way.
Yeah. But go ahead with your question.
Thank you for clarifying. But just so the question is, if market conditions were different, do you think it would still be 41%, or do you think you're-
Oh, we'd have to do those no matter what. Because, you know, you look at Pfizer here, we can't lease it as office, even if office was booming. That's really not our business anyway. It's never our business plan, either.
Right. Exactly. So I don't think it would have changed at all. Yeah. All right. I think in deference to to Dan, we're going to formally adjourn the Investor Day meeting. And those of you who would like to join us separately for thought leadership, please, please hang out for a couple of minutes while we change up the stage, and thank you so much.