Boston Life Sciences Market Ends 2021 on High Note with Record Low Supply and Highest-Ever Rents

Eric Smith

BOSTON–Demand for new life sciences lab space in the Boston Metro market showed no signs of slowing down during the fourth quarter of 2021 with nearly 1.9 million sq. ft. of positive net absorption resulting in record-breaking asking rents and a vacancy rate of just 1.3%, according to a new report from CBRE. “The Boston lab market is a supernova with unprecedented demand and record-setting venture capital funding,” said Eric Smith of CBRE. “Rents have climbed to the highest point on record because of phenomenal positive absorption of 5.2 million square feet in 2021. With virtually no supply on the horizon until 2023, many lab companies will be forced to find ways to optimize their space utilization or entertain less than ideal split operations.” Leasing velocity also set new record highs during Q4. More than 2.4 million sq. ft. was leased, driven by several major commitments by Flagship Pioneering, which alone leased 400,000 sq. ft. of lab space in Cambridge and Boston CBD. The vacancy rate for existing lab and research & development space is just 1.3 percent in the Boston-Cambridge market as average asking rents climbed by 4.2% from the previous quarter to end the year at $97.73 per sq. ft. East Cambridge boasted the highest rent in the market with average asking rents having jumped by 2.1 percent in Q4 to $125.67 per sq. ft. While the market had 1.4 million sq. ft. of new lab space delivered during the year, 98.2% was preleased. An additional 4.5 million sq. ft. of space is expected in 2022, but even that will not meet the demand as 67.5% has been spoken for by a variety of users. One of the biggest factors in the market’s ongoing strength has been record-setting venture capital investments in life sciences. According to CBRE, over the past year more traditional core investors have entered the market. Two notable examples of this trend of traditional investors acquiring life science properties were the purchase of 400 Sumer Street in Seaport by KKR/WS Development and MetLife-Norges/ARE’s purchase of 50-60 Binney Street in Kendall Square.