Boston Biotech Real Estate: Frenzied, Heated and Fervent, Says Hunneman

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BOSTON—How is Boston’s biotech real estate market? “Frenzied, heated, fervent,” says Boston brokerage form Hunneman in its latest report.

“Characterized  by  expansions,  new  development  and  record  funding  activity,  2018  marked  the  second-highest  annual  net  absorption  total  in  the  last  five  years.  Despite 17 consecutive quarters of positive absorption, speculative construction put upward pressure on vacancies in the local lab market during the  fourth  quarter,” the report said.

Availabilities remain scant, especially in Cambridge, said the report.

“With roughly three million square  feet  in  tenant  requirements  throughout  Greater  Boston, developers and landlords are getting more creative in terms of space useage and growing biotech clusters outside of Kendall Square,” the report said.

The  Massachusetts  life  science  industry  hit  a  funding  high,  for  both  venture capital and IPOs, in 2018. The report said that VC funding among local biotech companies is at a five-year high with more than $4.3 billion raised during 2018.

“Lab conversions are gaining traction especially in the suburbs. Demand from  biotech companies is at an all-time high, and suburban landlords are moving to   meet   this   growing   need.   Several   buildings/spaces   have   already   been   repositioned for lab use; including 1 Patriots Park in Bedford and 451 D Street in Boston,” the report said. “Others are looking to tap into this outsized demand.”

Here are other highlights from the report:

  • In Waltham, 60 Sylvan Road,  which  Verizon  will  vacate  in  its  relocation  to  North  Station,  has  been  earmarked  for  lab
  • At 1560  Trapelo  Road,  a  lab  conversion  is  being  considered  for  the  space  formerly  occupied  by
  • Boston Properties is reportedly redeveloping 33 Hayden Avenue in Lexington and 200 West Street in Waltham as well.

“Tight market fundamentals will ultimately lead to more activity outside of the traditional biotech nodes. Look for new supply in the form of ground up construction and redevelopments  throughout Greater Boston,” according to Hunneman Report. “Developers are pushing geographic boundaries as well, with proposals for new lab space popping up in South Boston, the South End and Allston/Brighton. (See the graph below for more information: Source: Hunneman)