“Placer has been a fantastic new tool in our due diligence process. Alternative data like Placer’s location analytics give insights into people and business performance that simply didn’t exist before.”

-- Craig Melcher, President / Investments

‍The Challenge

Evaluating Investment Positions in Life Sciences

Land & Buildings is a prominent activist hedge fund that works to affect change and unlock shareholder value at numerous public real estate companies. With $455M AUM, the life science sector is one of their core investment areas, which includes prominent companies Alexandria Real Estate Equities, Inc. (NYSE: ARE) (Alexandria, “ARE”), Healthpeak Properties, Inc. (NYSE: PEAK), and Biomed Realty (private). Performing due diligence prior to an investment in Alexandria, Craig Melcher, President of Land & Buildings, needed to determine whether the increase in post-pandemic remote work had specifically impacted Alexandria’s occupancy or whether they had recovered to pre-pandemic norms.

‍The Solution‍

A surprise in the data: Alexandria foot traffic down an average of 50% vs pre-pandemic

While broker conversations suggested, that traditional office tenants were reducing square footage requirements by an average of 20-30%, the Land & Buildings team set out to quantify post-pandemic shifts to remote work and determine how it may impact ARE’s performance.

Starting with the ~435 buildings owned by Alexandria, the Land & Buildings team narrowed it down to properties that ARE operated prior to January 2019, allowing them to study more than 70% of Alexandria’s total lab and office building square footage in Placer. 

To ensure that only employees were sampled, the Land & Buildings team set the minimum threshold to 60 minutes, then set the comparable time periods as March 2019 - February 2020 (pre-pandemic) and March 2022 - February 2023 (post-pandemic).

The results were unexpected.

Learn more about Visits Trend

Looking at one property cluster, the Alexandria Center for Life Science in New York City, the team noticed significant drops in traffic between the pre-pandemic and post-pandemic periods 3 years later, with some months seeing more than a 40% decrease in employees returning to their offices. 

Learn more about Daily Visits

Uniform drops in traffic across all days suggested that it was not hybrid work on select days causing the decrease, but something more structural.

The Outcome

A 50% drop in post-pandemic traffic Becomes A Key Component In Public short Thesis

After analyzing the results of all properties studied, the Land & Buildings team calculated that the overall decrease in foot traffic across the Alexandria portfolio averaged 50%, higher than expected when they began due diligence and a critical component that led to Land & Buildings’ public short thesis for Alexandria. The short position is explained in greater detail via a white paper posted on the Land & Buildings website.

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