The Cambridge lab market’s vacancy rate increased almost two percentage points in the first half of 2011, according to a report from Colliers International.
During the period, 254,000 square feet of office space was converted into labs, and another 48,000 square feet put on the market after a drug company got bad news from its leading product combined to push the vacancy rate from 15.1 percent to 16.9 percent.
That doesn’t take into account the 700,000 square feet of office and lab space Vertex is set to vacate in 2014 when it moves its operations into about 1.1 million square feet of space on Fan Pier in South Boston. And no one is quite sure what Sanofi-Aventis will do with its approximately 600,000 square feet of office and lab space, inherited when it purchased Genzyme Corp. earlier this year, said Joseph Flaherty, executive vice president and managing partners for Colliers International in Boston.
Still, Flaherty said the addition of large chunks of empty space to the market may actually be coming at a good time.
"There are almost 9 million square feet of lab tenants in Cambridge, so I think Vertex’s space will be absorbed very orderly," Flaherty told Banker & Tradesman. "There’s been very little Class A existing lab space available in the last few years, and that’s what Vertex is putting back on the market. I think there will be strong demand for that space," from growing Cambridge companies or other big pharmaceutical firms moving in.
But the modest increase in vacancy rates in Cambridge hides the roughly 1.9 million square feet of new office and lab space for life science companies and organizations coming on line over the next few years. Eighteen months after relocating its headquarters from Cambridge into a new 350,000-square-foot building in Weston, Biogen surprised most and announced its intention to bring its corporate operations back to its existing R&D campus in Kendall Square. In early July, Biogen agreed to lease two build-to-suit office buildings, one with Boston Properties at 17 Cambridge Center for 190,000 square feet, and a second with Alexandria Real Estate Equities at 225 Binney St. for 307,000 square feet.
There are also commitments in place for build-to-suit lab and office buildings for Novartis at 181 Massachusetts Ave., the Broad Institute at 75 Ames St., and Pfizer at 610 Main St. Novartis is moving forward with plans to construct a two-building, 500,000-square-foot facility on a development site it ground-leased from MIT in 2010, located just north of the intersection of Massachusetts Avenue and Albany Street.
The Broad Institute finalized its expansion with Boston Properties to add a new 250,000-square-foot research and administrative building at 75 Ames St. in Kendall Square. The building will be connected to the existing Broad facility at Seven Cambridge Center and occupancy is expected during the first quarter of 2014. And at 610 Main St., Pfizer committed to lease the entire seven-story, 230,000 square foot building. The MIT-owned development project is being marketed as "Six Ten at MIT" and will include an additional 230,000-square foot building on the site when fully built out.
Skanska USA Commercial Development has begun speculative construction on a 105,000-square-foot building to accommodate either office or lab use with expected completion in 2012.
Future construction is also planned at 400 Technology Square, where Alexandria will convert the 215,000-square-foot office building to laboratory when Forrester Research vacates the space later this year. The Ragon Institute, a collaborative research organization of MGH, MIT and Harvard that is currently located at MGH’s Charlestown facility, has committed to take 100,000 square feet in the building.
