Boston is an international hub for research, particularly in the life science fields of biotechnology, genetics and pharmaceuticals. For a long time, the life science sector had been concentrated in two key submarkets: East Cambridge and the Longwood Medical Area. Driven by its proximity to MIT, East Cambridge has long been a technology hub that today is home to almost every major biotech company in the world. Longwood is driven by the concentration of world-class teaching hospitals and offers the only “bench-to-bedside” research and treatment opportunity in Boston. Today, this is changing as a result of Boston’s CBD exhibiting some of the tightest market conditions in the country.
Boston and Cambridge contain approximately 14.7 million square feet of lab space. Currently, there are 10 active requirements greater than 100,000 square feet, but with an overall vacancy rate below 3.5 percent, this effectively represents full occupancy. As a result, rents for lab space are at an all-time high; in some instances, starting rents are topping $80 per square foot triple net leased. Given the lack of available space and the sheer cost of doing business in the urban core, many tenants are exploring suburban alternatives to conduct cutting edge research. Aside from being more affordable, suburban alternatives can also offer tenants larger blocks of space that can be quickly renovated (as opposed to needing to be built from scratch), larger floor plates and more convenient access for the highly-educated employment base that tends to skew older due to longer education required to enter the field. As a result, Watertown, Waltham and Lexington are surging as mini-clusters on the Boston landscape.
Given its proximity to East Cambridge and Kendall Square, Watertown has long been an obvious choice for tenants seeking value while still retaining an urban context, walkable amenities and public transportation. Alexandria owns a 430,000-square- foot park (480 and 500 Arsenal Street), which is home to Enanta Headquarters, Forma Therapeutics, Tetraphase Pharmaceuticals and Selecta Biosciences. Read HFF's recently published post on Watertown as one of Boston's most active areas for commercial real estate investment.
Long considered Boston’s most attractive suburban location, Waltham has also distinguished itself as one of the most desirable places for biotech tenants. Second Avenue, in particular has emerged as a choice destination with Genzyme’s Drug Discovery & Development facility at 153 Second Avenue, Bioverativ’s recent lease of 112,500 square feet at 225 Second Avenue and NetBio at 266 Second Avenue. AstraZeneca has transformed its campus into Gatehouse Park BioHub Park and welcomed outside tenants, including Syndax Pharmaceuticals, Morphic Rock Therapeutic and Entasis. Perhaps nothing is more telling than the decision by King Street Properties to deliver 144,910 square feet of speculative lab space at 828 Winter Street.
Located west of Cambridge, which is easily accessed via Route 2, Lexington has long been a favorite location for emerging and established life science companies. Hartwell Avenue has emerged as a favorite destination for early stage drug companies, including Promedior and Inotek Pharmaceuticals. Shire, perhaps the most notable tenant (and the town’s largest tax payer), occupies more than 1.1 million square feet of owned and leased space alongside Route 2.
Boston’s significance as a life science cluster will only increase as the region generates, attracts and retains an outsized amount of intellectual capital. The importance of this highly educated workforce is clearly visible when looking at companies relocating and growing their presence in greater Boston. Eight of the top 10 life sciences companies (as ranked by market capitalization) have a major presence in the Boston market, many of which are relocating employees to the region from around the world. Given this base of talent, a thriving venture capital community and robust funding from the National Institute of Health, Boston also serves as the perfect breeding ground for new drugs and discoveries. Existing tenants will continue to expand their footprint within the region and early stage companies continue their creation amidst a thriving ecosystem. As Boston’s urban commercial real estate market remains incredibly tight due to natural and regulatory barriers to entry, its suburbs are poised for growth.
Robert Butler is an associate real estate analyst in HFF's Boston office. He works with the debt and investment sales teams underwriting and preparing financing offering materials for all property types in the Boston market. Additionally, due to his fluency in Mandarin Chinese, he assists the increasing number of Chinese groups seeking investment opportunities in Boston.
Mr. Butler joined HFF in 2014. Prior to HFF, he had leasing and advisory roles for both JLL's office markets team in Beijing, China, and CBRE's retailer rep team in Chengdu, China. His responsibilities included helping Fortune 500 companies and Western brands expand their presence in China. Mr. Butler is a graduate of Wake Forest University, where he majored in business with minors in entrepreneurship and global trade and commerce.
Tucker Burleigh is a real estate analyst in HFF's Boston office. He is primarily responsible for performing financial and market analysis, preparing offering documents and coordinating the due diligence process for both the investment sales and debt placement groups.
Mr. Burleigh joined the firm in October 2016. Prior to joining HFF, he interned in preconstruction management at CH Newton Builders while attending Williams College for his undergraduate degree.