Compared with the relatively quiet Boston and suburban office and lab markets, activity in the Cambridge lab market stood out during 2010. And the pace is expected to continue in 2011.

Although there was no speculative development to come on line, net lab supply increased by over 100,000 square feet due to additions such as Alexandria Real Estate Equities’ conversion of office to lab space at 215 First St., and space conversions/renovations at two MIT-owned buildings – 640 Memorial Drive and 281 Albany St. These renovated/converted spaces provide improved Class A and B options to prospective tenants.

Merck’s decision to close its 140,000-square-foot research facility at 320 Bent St. dampened the absorption statistics in what otherwise would have been a strong year. The Merck space, combined with an additional 37,000 square feet in the building vacated earlier in the year by Ironwood Pharmaceuticals, should be well received in the market during 2011, however, as it represents Class A existing lab space in excellent condition.

Cambridge lease velocity (signed leases) totaled nearly 1 million square feet during 2010, with well over half of this activity occurring during the third quarter and approximately 400,000 square feet representing renewals.

Headed into 2011, the market is very healthy for most landlords, with strong demand being driven by large pharmaceutical companies and institutions, as well as early and mid-stage biotech companies.

Expect to see new developments in the months ahead:

• Skanska USA plans a 115,000-square-foot spec lab building at 150 Second St, with construction to begin in the second quarter.
• HCP/LFREP Ventures LLC recently acquired 1030 Massachusetts Ave. for just under $19 million and plans to convert the top three floors of the 65,000-square-foot office building into lab space.
• The HYM Investment Group with capital partners Canyon Johnson Urban Funds and Atlas Capital Group have entered into a joint venture agreement with the landowner, Boston & Maine/Pan Am Railroad, to further develop the highly publicized NorthPoint project in East Cambridge. NorthPoint is a planned 45-acre, 5-million-square-foot, mixed-use development that is permitted for 2 million square feet of laboratory and office space.
• Clearly, the East Cambridge commercial real estate market has put the “Great Recession” in the rearview mirror.

Tucker Hansen is senior vice president of Colliers International in Boston. E-mail: tucker.hansen@colliersmg.com