Boston continues to win large corporate tenants from our neighboring states.
In an article on the Courant, Alexion said “its headquarters would move from New Haven to Boston to support plans for growth…[noting] Boston will provide access to a ‘larger biopharmaceutical talent pool and a variety of life-sciences partners to further support future growth initiatives.’”
Small to mid-sized tenants need to seek the value play by looking along the Red Line corridor in Downtown Crossing, with rents ranging from the high $20’s to mid-$40’s PSF.
A recent Crains.com article notes, “Smaller companies, however, are feeling the squeeze. The problem is more acute for Boston’s booming biopharma industry than for tech companies…More than 96 percent of Cambridge’s 10.24 million square feet of lab space is occupied, according to an analysis by commercial real estate investor Transwestern.”
Office rents continue to climb in East Cambridge in both Lab and Office with some of $80 per square foot.
A BBJ article reports, “Escalating rents in Cambridge’s Kendall Square are pushing away some young life science and biotech companies, but there’s still incredibly strong demand for Class A office and lab space in the neighborhood, according to Alexandria Real Estate Equities.”
You can read the full article on the Boston Business Journal’s website.
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.
How green is your Cambridge lab space? The City of Cambridge is trying to make lab space as green as possible.
“A city task force has been meeting for nearly a year to come up with a way for new buildings in Cambridge to be “net zero” to significantly reduce emissions. But some of the most energy-intensive buildings in Cambridge are biotech labs, which require a significant amount of specialized infrastructure, including high-powered ventilation systems to deal with any potentially hazardous gases,” the Boston Herald reports.
The Herald article offers a detailed look at the steps required — and planned — for Cambridge buildings to produce “zero emissions.”
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 lab space continues to be sought over by some heavyweights in the life sciences. The BBJ is reporting that “Bristol-Myers Squibb is on the hunt for up to 200,000 square feet of office and lab space in Cambridge, the latest major life sciences firm to crowd into one of the hottest commercial real estate markets in the country…the New York-based pharmaceutical giant, which already occupies 60,000 square feet of space in Waltham as well as 400,000 square feet in Devens, is targeting new research and administrative space in East Cambridge’s Kendall Square neighborhood, home to some of the biggest drug and technology developers in the world.”
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.