Peter M. Moglia
Co-Chief Executive Officer & Co-Chief Investment Officer at Alexandria Real Estate Equities
Thank you, Steve. I'm going to update you all on the value creation pipeline, discuss the continuation of construction costs and supply chain macro issues and comment on the 100 Binney disposition. Leveraging our unique market industry insights and the proven expertise of our best-in-class team, our value creation pipeline is tactically broadening our core clusters to meet the needs of our world-class tenant roster. Reflecting the continuing strong demand referenced in Steve's comments, and our ability to capture it due to our trusted brand, AAA locations, inspiring aesthetics, operational excellence, curated amenities, and capability to elevate the tenant experience. Our value creation pipeline of projects that are either under construction or expected to commence construction in the next six quarters has increased to eight million square feet that is projected to add more than $665 million in annual rental revenue, primarily commencing from the second quarter of this year through the first quarter of '25, a $55 million increase over what was discussed last quarter. As of quarter end, 77% of this remarkable pipeline was either leased or under negotiation, which means we have an executed LOI. With an astounding 94% of the activity coming from existing relationships, highlighting the incredible loyalty to our stellar brand.
Our tenant base is an award for talent and recognize that space at an Alexandria's campus is mission-critical in that fight. Without question, our ability to offer our tenant-based scalability and comprehensive amenity offerings through our mega campuses is a truly unique differentiator and why Alexandria is the clear choice to provide mission-critical facilities to the life science industry's most innovative and successful companies. During the first quarter, we delivered 566,655 square feet from 10 projects located in eight different submarkets, reflecting the diversity of our pipeline made possible by strong demand across all regions. The deliveries provide strong GAAP yields at approximately 6.7%, translating to approximately $36.1 million of annual NOI. Alexandria's tremendous execution on our value creation pipeline represents a key component of our compelling growth engine, and an example of this is the extraordinary job our highly seasoned development teams are doing in managing cost escalations and supply chain disruptions that continue to proliferate throughout the construction industry.
Approximately a year ago, in our first quarter call for 2021, we included commentary on construction cost trends because construction cost inflation was anticipated to be outsized due to double demand for materials and labor caused by the simultaneous restart of paused and new projects, combined with shortages in materials and labor due to closing of mills and fabrication shops, weather events, and the loss of workers who migrated to different careers. It was all expected to be transitory, and even last quarter, we noted expectations for things to start normalizing in 2023. However, war, COVID in China, and transportation issues have become the latest antagonist in the story and reversed any thoughts to the near-term stabilization. The war in Ukraine's biggest impact on construction costs is an astronomical increase in fuel costs. Sustainability experts will tell you that the embedded carbon of constructing a building is equal to the carbons used to operate the building for 30 years, much of it coming from fuel earned by the trucks delivering materials to the site and the machinery that produces the earthwork on the build. In addition to fuel, the war has reduced the supply of critical semiconductor materials such as palladium and nickel, exacerbating the chip shortage, which affects such things as building control systems and emergency generators, the latter of which can now take up to a year to deliver.
Other raw materials that come from the area are used to make certain metals like aluminum and contributing to their inflation. Transportation issues proliferate throughout the economy and construction is no exception. If you spend any time on a construction job site, you will marvel at the amount of coordination that needs to take place as trucks come in and out of the job, delivering materials or hauling things away. In addition to the cost of fuel, inflationary pressures coming from an estimated 50,000 to 80,000 trucker shortage emanating from outdated compensation models and the allure of last-mile delivery companies reducing the pool of candidates. In addition to trucking, we're keeping our eye on labor negotiations for over 22,000 dock workers on the West Coast. The deadline to reach an agreement is July 30. And if they strike, it could place pressure on alternative ports and further delay delivery of materials. Specific material problems today include steel, copper and aluminum, roofing materials, elevators, HVAC equipment, switch gear, transformers and emergency generators. Materials and equipment are both expensive and tough to get. Many of these items take twice as long to get than in normal times and continue to go up in price by double digits.
Rest assured, we are tightly managing these conditions. As mentioned last quarter, the biggest asset we have to leverage is our decades of experience in developing purpose-built laboratory buildings, enabling us to mitigate delays. Currently, approximately 82% of our costs, or development and redevelopment projects, aggregating to 5.4 million square feet are subject to guaranteed maximum or other contracts that enable us to mitigate the risk of inflation. We have contingencies behind those contracts to account for scope creep and unknowns. The other 18% is from projects that are currently pending guaranteed maximum contracts that are in process, and those disclosures include larger contingency allowances. The voracious demand for high-quality life science assets in key cluster markets led to a highly competitive bid for our 100 Binney asset. Our excellent execution led to our third asset sold with a valuation exceeding $1 billion, and the fourth to achieve a sub-4% cap rate.
We sold a 70% interest in the 432,932 square foot lab office building anchored with long-term credit tenants for a purchase price based on a total valuation of $1.20 billion through which we received proceeds exceeding $700 million. The cash cap rate was a record for our capital recycling program at 3.5% and enabled us to harvest a profit of approximately $410 million. The price per square foot of $2,356 exceeds the record price we set last quarter in the sale of 50 Binney to 60 Binney by 3.7%, which is meaningful considering the uncertain interest rate environment we were and continue to be in during the quarter and the disruption caused by Russia and Beijing of the Ukraine that happened on February 24.
With that, I'll pass it over to Dean.