Boston— Despite some challenges including hiring struggles by startups, public capital shifting away from risky investments, and climbing interest rates, Boston’s life sciences lab space sector began 2022 on solid footing.
According to CBRE’s industry-leading figures report, robust demand during Q1 resulted in record-breaking asking rents and a vacancy rate of just 0.8% — the first time it has dropped below the 1.0% mark. “Although we experienced some headwinds, the market started the year with low vacancy rates, robust demand and record-setting asking rents, which hit $98.54 per sq. ft in Q1,” said CBRE’s Eric Smith. “Looking ahead, the market’s breakneck pace could slow a bit as some companies look to preserve capital.” One of the biggest impediments in the market is the lack of quality space, given an availability rate of below 1.0%. As a result, much of the new leasing activity was dominated by buildings under construction or planned for development. So far in 2022, more than 65% of the 3.4 million sq. ft. of spec lab development has been pre-leased. According to CBRE’s report, extensive venture capital funding was once again a driver of leasing velocity, with 30% of life sciences companies that signed leases this quarter closing a funding round within the last two years. More than 2.0 million sq. ft. was leased during Q1 2022, with the largest commitments being a 334,000 sq. ft. lease in Boston’s Seaport submarket by Eli Lilly at 15 Necco Street, and a 150,000 sq. ft. renewal and expansion by Realign at 41 Seyon Street in the 128 West market. In addition, Intellia Therapeutics inked a 140,000 sq. ft. lease at 840 Winter Street and Vericel Corp. took 126,000 sq. ft. of lab space at 25 Network Drive. Both new deals were in the 128 West submarket.