Greater Boston’s Life Sciences Real Estate Market: A Brief Slowdown


BOSTON—Greater Boston’s Life Sciences and Lab facilities market is well-positioned to withstand what many hope will be a brief downturn, according to report from brokerage firm NKF.

“First-quarter performance was indicative of peak-level market fundamentals leading up to the COVID-19 pandemic that has swept the country since mid-March, dampening market activity and sentiment,” the report said. “Laboratory net absorption rose to 889,000 square feet across Greater Boston this quarter, having been largely driven by near-insatiable demand for new construction, especially in Cambridge where vacancies have stood in the low single-digits for three years.”

The report said that three new projects delivered a total of nearly 900,000 square feet, with 96.0% occupancy this quarter.

“With most new under construction projects having pre-lease commitments and chronic low vacancy in existing inventory, the market is well-positioned to withstand what many hope will be a brief downturn,” the report said.

Here are other highlights from NKF report:


Extremely low existing vacancy, strong pre-leasing in new construction, and the first quarter’s typical slow start, all led to decreased leasing activity. However, several notable tenants expanded their footprints, including Intellia Therapeutics leasing the 39,000-square-foot building at 281 Albany Street and Genocea Biosciences expanding by a floor at 100 Acorn Park Drive in West Cambridge.

A slight increase in sublease availability this quarter is mostly the result of companies reshuffling

among premises or leasing excess space for future growth. The number of downsizings is low, but given current headwinds, sublease availability will be closely monitored.

Net absorption in Cambridge rose to more than 611,000 square feet in the first quarter of 2020, with the delivery of 222 Jacobs Street at Cambridge Crossing and Building 400/500 at Cambridge Discovery Park being the major drivers of the quarter’s gains.

More absorption in West Cambridge, particularly within newly constructed and renovated assets, brought the submarket’s vacancy down to 12.2%, a respectable level after having seen a 98.0% increase in inventory since late 2018.

Overall Cambridge vacancy rose slightly, but at 2.4%, the rate still remains exceptionally low and is just above the 2019 average of 1.9%.

New laboratory construction delivering through 2022 is fully leased, with the exception of Cambridge Crossing’s building at 250 Water Street, which has been undergoing foundation work. Leading up to the

COVID-19 pandemic, several projects were advancing through the entitlement and development processes, but given current market forces, it remains to be seen how many of these projects actually break ground in 2020.


Leasing activity in the suburbs was driven by new construction in the first quarter, as was net absorption with the Alkermes build-to-suit in Waltham being delivered.

King Street Properties’ speculative building at 75 Hayden Avenue is now 72.0% leased after signing three new leases, including two full-floor commitments with Dicerna Pharmaceuticals and Frequency Therapeutics. Voyageur Therapeutics expanded out of Cambridge to take the other half floor.

Hobbs Brook’s project at 225 Wyman Street in Waltham is the only development underway, outside of the Inner Suburbs, that can accommodate large laboratory users. New supply in the suburbs continues to be heavily driven by laboratory conversions. 4 Burlington Woods was completed this quarter and both 20 Maguire Road in Lexington and 200 West Street in Waltham are due for completion next quarter.

1560 Trapelo Road in Waltham, recently acquired by Phase 3 Real Estate Partners, is also being renovated. Alexandria is now marketing laboratory space at The Arsenal on the Charles in Watertown, the campus it recently purchased from athenahealth.

Next door, Boylston Properties is hoping to begin construction on a new 155,000-square-foot building at Arsenal Yards.


Given that the impact of the pandemic is still new, first-quarter sales activity continued to reflect investors’ long-term confidence in the region’s life science sector. Investor capital continued to flow into noncore assets and emerging locations, with both new and existing investors expanding their portfolios.

IQHQ, the joint-developer of Fenway Center along with Meredith Management, acquired nearby 109 Brookline Avenue from Equity Commonwealth for $270 million. The same buyer also scooped up Eisai’s former research campus in Andover for $36 million. Phase 3 Real Estate Partners acquired 1560 Trapelo Road in Waltham, its first asset located outside California, for $23 million.

Hong Kong-based Nan Fung Life Sciences Real Estate secured its first local investment, acquiring two Class B office assets in Boston for a combined $190 million. Healthpeak Properties remains very active and is expected to close soon on The Post at 200 Smith Street in Waltham.

Anchor Line Partners and Northwood Investors are expected to reap $320 million, or roughly $745 per square foot, from the sale of this former U.S. Postal Service facility that has been fully renovated and is 100% leased.


The onset of the COVID-19 pandemic has widely tempered the local economy and real estate market outlook for 2020. Tenants able to postpone long-term real estate decisions will do so, with more earlystage companies placing a greater emphasis on capital preservation. Investor capital flowing into the region’s life science sector had alreadybegun to moderate last year and with current headwinds likely to pull the U.S. economy into a recession, new funding is poised for a falloff in 2020. At this point, the best-case scenario is a V-shaped recovery with growth returning in late 2020, but the situation and outlook is rapidly evolving on a daily basis.