Boston Life Science Development Pipeline Exceeds Pre-Pandemic Levels

Eric Smith

Boston– After a record-setting 2021, the Greater Boston life sciences lab space market returned normal last year, a trend that has extended into the first half of 2023, according to CBRE’s Q2 Boston Lab Figures report.

Due to economic uncertainty, lab tenants took a step back and as a result, leasing velocity of 520,000 sq. ft. in Q2 was down from last quarter’s 850,000 sq. ft. of leasing. “Credit tightening and a potential recession tempered life sciences leasing, with tenants reevaluating their space requirements,” said Eric Smith of CBRE. “While space users have become more conservative after record leasing just two years ago, developers are planning for future growth.”  According to the CBRE report, more than 17 million sq. ft. of lab space is under construction. The market posted 193,000 sq. ft. of negative absorption — only the second quarter of negative absorption in the last four years — while the vacancy rate increased 130 bps to 5.4% due to delivery of completed projects in both urban and suburban Boston. Asking rents remained relatively flat during Q2, climbing slightly by 30 bps to $97.80 per sq. ft. NNN, up from $97.50 per sq. ft. last quarter.The most noteworthy deal of Q2 was Orbital Therapeutics’ 166,000 sq. ft. sublease from Bristol-Myers Squibb at 100 Binney Street in Cambridge. Once the transaction was completed, Orbital Therapeutics put 71% of the space onto the sublease market for the short term with the goal of growing into the full space over time. On the capital markets front, downward pressure on the debt and equity markets continued as economic uncertainty and tightened lending standards weighed down any meaningful transaction volume. Two transactions that did close during Q2 were the sale of  The Waltham/Memorial Drive Portfolio and 15 Necco Street. Both are Class A, stabilized assets and were sold on behalf of ARE.Full report: Boston Metro Lab Q2 2023.pdf