Is life sciences passing biosquare by?

Kathleen C. Doyle insists such is not the case, but the broker for the master-planned research park in Boston’s South End does acknowledge frustration that the recent surge of biomedical leasing activity in Greater Boston has not translated into a deal large enough to get BioSquare moving forward once again. Efforts to find an anchor tenant for the project’s third research facility have been hampered by a razor-thin timetable life sciences companies often have for getting into new space, said Doyle, a principal with GVA/Thompson Doyle Hennessey & Everest, exclusive leasing agent for the $600 million complex.

“Most of these companies need something immediate,” Doyle explained last week, “They can’t wait 20 to 22 months for their space to be built, and that has definitely been a problem.”

Essentially, BioSquare is caught in commercial real estate’s classic “chicken-and-egg” dilemma, said Doyle, maintaining the development would almost certainly have landed a tenant if the space were available or, at the very least, at some stage of being under construction. Developers Boston University and Boston University Medical Center have been unwilling to push ahead on a speculative basis, in contrast to local competitors such as Cabot, Cabot & Forbes, and Doyle said that has been a stumbling block in negotiations.

“I wish we had a building,” she said. “If we had one up, we would have a lot of activity.”

Having failed to develop a former Allston warehouse into a telecommunications center, CC&F has pushed ahead to build out the space for life sciences use, and Doyle admitted that decision has put CC&F about nine to 12 months ahead of BioSquare’s earliest delivery date. Meanwhile, other communities have jumped on the biotech bandwagon, with some firms moving outward to the suburban markets in search of cheaper opportunities.

Despite such challenges, Doyle is nonetheless upbeat about BioSquare’s prospects, adding she supports the institutional caution being employed by its developers. The inherent strengths of BioSquare’s proximity alongside Boston University Medical Center and range of planned amenities at the park will ultimately prove a winning combination, Doyle insisted.

With an eventual campus build-out of 2.5 million square feet, BioSquare’s research buildings will be supplemented by a mixture office, retail and conference center space, as well as a 240-room hotel, which is slated to be constructed in the yet-uncompleted first phase. That phase also includes the final two research buildings, one to total 161,000 square feet and the other 142,000 square feet.

The full-service approach will become increasingly important to tenants, said Doyle, especially as companies compete for the best and brightest researchers and scientists. Not only does BioSquare feature the collaborative opportunities offered by being adjacent to the medical school and working alongside other like-minded companies, Doyle said the arrival of major players such as Novartis AG and AstraZeneca are forcing companies to be more employee-friendly in order to keep and attract employees. That trend speaks to BioSquare’s strengths, Doyle said.

“BU was ahead of the curve in envisioning the types of services that will be important,” she said. “We really do offer the complete level [of amenities] that is needed to attract these companies.”

Location Doubts
Even that full slate may not be enough, however, according to some industry observers. Robert B. Richards, a veteran in biotechnology leasing activity in Massachusetts, said there are two major problems that have kept BioSquare from inking the tenants necessary to get another building underway. One is a complicated approval process that makes it a challenge to get leases signed, a situation Richards attributes to the project’s complex institutional ownership team. But a more fundamental difficulty, he said, is that many life sciences firms have been unable to get comfortable with the location, which is primarily situated among a mix of residential and older industrial facilities.

“It’s a tough assignment,” Richards said. “I think there are a lot better locations that will attract tenants before BioSquare.”

Whatever the reason, it has certainly been a while in getting the project to the next level. After the initial 200,000-square-foot research building opened in 1993, BioSquare successfully delivered the 192,000-square-foot Evans Biomedical Research Building in January 2000. The last structure, a 1,000-vehicle parking garage, opened in August 2000.

Efforts to discuss BioSquare with its owners were unsuccessful, but Doyle defended the complex going forward, insisting the recent struggles have been more a factor of timing and circumstance than an industry wide indictment of the project. Indeed, Doyle said there has been a recent surge of interest among potential tenants, improving the likelihood that a deal could be done soon to kick off one building or the other. While declining to name names, Doyle said one firm is seeking 65,000 square feet, and two others would need a total of 100,000 square feet.

“We are in discussions with a number of good prospects,” she said. “Now it’s just a matter of nailing them down.”

Doyle said she is not sure at what stage the hotel is at, but that particular market has had problems securing financing for new construction. Whether that has been the cause for the delay is unclear, but Doyle insisted the advent of BioSquare will create the demand necessary to get that building developed as well, particularly with some 10,000 people already lured to the area daily by the medical center and the existing BioSquare properties.

Among other attributes, Doyle said the sheer size of BioSquare will eventually prove another benefit, especially given that she considers Cambridge “a no-growth market” that could dampen enthusiasm among companies to invest huge sums in their physical plant only to be squeezed out as they evolve into larger firms.

“People want to know that if they grow, they are going to be able to stay on site rather than have to pick up and go somewhere else,” Doyle said. “That’s a big challenge for the marketplace, and we offer the [solution] they are looking for.”

Delivery Date Delays Costly: Biotech Passing by BioSquare

by Banker & Tradesman time to read: 4 min