After building pockets of hip amenities to attract growing companies and their Millennial workforces, developers are trying a more drastic and potentially capital-intensive strategy to fill up suburban office parks: pivoting to life science lab space.

Lab space leasing has outperformed its historical track record this year in the Route 128 submarket spanning from Lexington to Woburn, according to research by Colliers International in Boston. Lab space accounts for 38 percent of the 341,243 square feet in positive absorption through Sept. 30, in a market in which life science space accounts for just 14 percent of inventory. And life science tenants have approximately 3 million square feet of requirements in Greater Boston, according to Colliers.

Fierce competition for the few availabilities in East Cambridge prompts a look at Route 128 as the industry’s largest cluster continues to expand. For decades, maturing life science companies have migrated from Cambridge to the suburbs for additional space and lower rents. What’s new is the willingness of deep-pocketed institutional investors such as Carlyle Group and J.P. Morgan to bankroll office-to-lab conversions and speculative lab construction along Route 128.

“When you have capital partners like that, their yield requirements are lower, which drives value to places we didn’t expect to see,” said Stephen Lynch, a principal at Boston-based life science developer King Street Properties.

Concert Pharmaceuticals and Accent Therapeutics leased more than 70,000 square feet at King Street Properties’ 65 Hayden Ave. this spring. King Street is still seeking tenants for a 145,000-square-foot speculative lab building at 828 Winter St. in Waltham and another 209,000 square feet at 75 Hayden Ave. in Lexington.

“Everything is driving off of the tightness in Cambridge, and Alewife is extremely tight as well. That’s pushed a lot of activity further west, and the recent lab conversions in Waltham have all been very well-received,” said Jason Levandusky, a partner at CBRE/New England.

Steve Adams

Shorter Lease Terms Match Industry Business Model

More developers are taking the lab conversion route, encouraged by officials in towns like Lexington, who view lab space as less disruptive than office or multifamily projects.

For their part, tenants have a broader selection of properties to choose from in the suburbs and can negotiate more flexible lease terms, which matches the rapid lifecycle of venture capital-backed firms.

“The tenants that are more mature and not in a position to occupy an incubator say, ‘Let’s go to the suburbs. It’s hard to get our employees there, but we’ll pay them more. It’s worth it because we can get a three-year lease rather than having to sign a 10-year lease in the city,’” said Jonathan Davis, CEO of The Davis Cos.

Davis Marcus Partners, a joint venture with Marcus Partners, is developing a 220,000-square-foot lab and office building at 900 Winter St. in Waltham for Alkermes in an expansion at its Reservoir Woods campus.

In some cases, lab conversions are in the works at properties that lost big office tenants to downtown properties.

Davis said his firm is considering a lab conversion for 60 Sylvan Road in Waltham, a 196,000-square-foot office complex occupied by Verizon Innovation Center. With a lease expiring in 2021, Verizon has signed on as anchor tenant for The Hub on Causeway office tower in Boston.

A real estate source said Hilco Real Estate is considering a lab conversion for at least a portion off the 440,000-square-foot CenterPoint complex in Waltham, a former Raytheon manufacturing hub that it acquired this year for $86 million. The upgrades come as a major tenant, engineering firm Simpson Gumpertz & Heger, is relocating to 20 CityPoint in Waltham.

Inner suburban lab markets are emerging as well, such as NB Development’s Boston Landing in Allston and Boylston Properties’ LINX in Watertown, marketing space cheaper than East Cambridge but higher than Route 128. Boylston Properties is marketing 107,000 square feet of lab-ready space at Arsenal Yards, its mixed-use redevelopment of the Arsenal Mall property. Cushman & Wakefield is handling the leasing assignment.

LINX, an industrial-to-office/lab conversion of a former Verizon warehouse, sold for $158 million, or over $850 per square foot, to Clarion Partners in August after filling its tenant roster with biotech startups.

“It’s really opened peoples’ eyes to the possibilities of lab,” said Mark Roth, an executive managing director and suburban broker at Newmark Knight Frank. “The concern always was the (life science) tenant doesn’t have any credit, and there’s only a couple of (developers) I can sell it to. Now, you’ve got Morgan Stanley and other people in this space who understand it and aren’t afraid of it.”