A substantial wave of new building projects under way in Greater Boston dramatically bucks a national trend of stagnant commercial development, reflecting the health of the region’s bustling biotechnology sector.
In total, 2.6 million square feet of new space is under construction at eight sites in Boston and Cambridge. Two million of this was started in 2011, and is being built to suit biotechnology users and companies. With an additional 1.2 million square feet of space likely to commence in 2012, the region is set to further secure its current place as the nation’s second most active construction market, after New York.
Of the space under construction, 1 million square feet is laboratory, including one 550,000-square-foot building under development at the new Vertex Pharmaceuticals campus in the Seaport District, and 230,000 square feet under way at a site Pfizer intends to occupy in East Cambridge.
The laboratory product is, in total, 83 percent pre-leased, substantially higher than the 41 percent average pre-leasing experienced market-wide over the past eight years. The 1 million square feet of office space under development consists of one of the 550,000-square-foot buildings to be delivered as part of the new Vertex campus in the Seaport District, and 495,000 square feet being developed at two proximate sites to constitute the new Biogen Idec world headquarters in East Cambridge (Biogen Idec had moved its headquarters and many of its office functions to suburban Weston in 2010).
Construction Boom
When including the lone non biotech-related project underway – the 580,000-square-foot expansion of Liberty Mutual’s Back Bay location, the 1.6 million square feet of office product under construction is 100 percent pre-committed, a notable amount of pre-committed space given an eight-year market-wide average pre-leasing rate of 53 percent.
The 2.6 million square feet under construction in Boston and Cambridge represents the greatest such commercial construction activity currently under way nationally, outside of the heavily-incentivized World Trade Center construction site in New York.
In addition to the substantial development activity already under way, three additional construction projects are highly likely to commence in 2012, resulting in an additional 1.2 million square feet of space. Novartis, already occupying approximately 2 million square feet of space in Cambridge and the city’s largest non-institutional occupant, is expected to begin construction on a 550,000-square-foot expansion of its campus. The Broad Institute, outgrowing its 2006-built 231,000-square-foot facility, has agreed with Cambridge Center owner Boston Properties to commence construction on a 250,000 square foot, build-to-suit building which the developer will sell to the Broad upon completion.
Longwood Center, a 350,000 square foot speculative building in the center of Longwood Medical Area, will also likely break ground, following the leasing and rental rate successes of the nearby Center for Life Sciences and the acute shortage of comparable space in the popular LMA.
Set against a backdrop of challenging economic conditions seen elsewhere nationally and globally, the construction seen commencing in the urban core of Boston and Cambridge reflects the health of the region and the critical nature of its focus on research and other sophisticated activities. With these intellectual functions and the thought-based economy anchored by the area’s top-tier educational institutions, the growth evidenced by the cranes in the sky will likely continue for many quarters to come.
Brendan Carroll is senior vice president of research at Richards Barry Joyce & Partners, Boston.
