Great Boston leads the nation with the most expensive lab space.
According to the BBJ, quoting a Sciences Outlook report by brokerage JLL, “Boston and Cambridge are by far the most expensive life sciences markets to rent lab space in the United States…Greater Boston’s life sciences rental rates have climbed 7.4 percent this year to reach an average rate of $47.40 per square foot. In Cambridge specifically, the average lab rent is $51.60 per square foot, the report said. The report also said tenants are currently on the hunt for around 1.3 million square feet of space in the city.”
Greater Boston’s life sciences rental rates have climbed 7.4 percent this year to reach an average rate of $47.40 per square foot, outstripping other top markets including Raleigh/Durham, North Carolina (up 12.4 percent year-over-year to $19 per square foot); San Francisco (16.9 percent, $37.30); San Diego (15.5 percent, $29.90); New York/New Jersey (8.3 percent, $24); and Los Angeles (4.9 percent, $30.70)…In Cambridge specifically, the average lab rent is $51.60 per square foot, the report said. The report also said tenants are currently on the hunt for around 1.3 million square feet of space in the city.
The global hot spot for Bio Pharma space is Kendall Square in East Cambridge with 130 life sciences companies in 2.5 square miles.
“Of the top 20 pharmas I think probably somewhere between 50 and 75 percent have a presence in and around Cambridge,” said Joel Marcus, CEO of Alexandria Real Estate, the landlord with the biggest market share in the area.
“As tight as the lab market is in Kendall Square, the office market is even more tight, in part because Microsoft and Google are expanding their operations,” MassBio’s Abair said. At the same time though, he noted the proximity of tech and life sciences companies enable cross-industry collaboration.
Lab space is nearly impossible to find in Cambridge and Boston. Companies that are looking to bring their concept to market can capitalize on brain tank of talent can find space within the greater East Cambridge market. Some landlords like Beacon Capital are considering converting traditional office floors to lab space to accommodate the market demand.
According to a Boston Globe report, “an additional 1.9 million square feet of lab space was under construction last quarter that will grow the Greater Boston lab market by more than 10 percent, according to Transwestern’s figures. Most of that space is near Kendall Square in Cambridge, and is scheduled to be finished in 2015 and 2016.”
East Cambridge is host to some of the best know pharma and tech companies. Lab space has become a very limited commodity and Amgen is in the hunt for 150k RSF. According to CoStar the lab vacancy rate among the 17 buildings is 7.1 percent on a direct basis or 17.3 percent including sublets.
The BBJ puts the competitive Kendall Square real estate market in perspective:
The East Cambridge office and research market includes only 6.4 million square feet — meaning…three deals alone could lock up about 10 percent of the neighborhood’s entire inventory when all is said and done. The activity, along with strong leasing among major information-technology players, is fueling a pricing surge in East Cambridge that has seen average annual rents surpass $58 per square foot, by far the highest in the region and among the highest for any neighborhood in the country, according to market data provided by Cassidy Turley in Boston.
The full article is available on the Boston Business Journal, here.
Boston continues to expand into the Seaport. The once-famed $7-per-day-dirt parking lots have been replaced with corporate office space for the biotech industry, law firms, financial services and newly funded technology companies. Did this happen overnight? Well, no. The Ted Williams Tunnel to the airport, and onramp to Mass Turnpike East and West fostered accessibility and spurred new opportunity. That level of infrastructure was the catalyst of for our current development cycle, combined with demand for residential and office development.
The Boston Globe states:
“The new face of Boston’s Seaport is the old face of the city’s downtown. The lawyers and accountants who are financing the waterfront construction boom are abandoning Boston’s historic commercial center for something newer and more exciting. This exodus is opening up cheaper commercial space for creative firms and tech companies…Boston’s downtown and its waterfront are slowly swapping identities.”
Boston continues to shine nationally due to our healthcare, education, finance, biotech and high-tech industries. Blackstone, owners of Equity Office are shopping their remaining Class A office portfolio to perhaps one buyer, which will push office rent even higher as the new ownership justifies their investment.
Here are some relevant projections for the Boston office market, from nerej.com:
A few key neighborhoods and areas will see particularly high levels of growth this year. Although major areas like the Back Bay and the Financial District continue to provide the largest amount of market space, growth and many new lease transactions will be seen in other areas, which provide more opportunities for company relocation and for out-of-town businesses to take root…Kendall Sq. in Cambridge is currently red hot, both for offices and for lab space in medicine, high-tech, and more. In particular, Google is coming in to Kendall Sq. and will take up 300,000 s/f of office space. Google will leave its own large footprint, while making the area even more attractive for other tech companies.