For life science companies looking for office and lab space, the suburbs represent a series of trade-offs. The office parks on Route 128 usually don’t have direct mass transit access. An off-site lunch usually means driving to a chain restaurant, and the end-of-day commute can bring long waits just to get on the highway.
But at the same time, companies in expansion mode can lease updated workspaces for roughly half the rents now being sought in East Cambridge.
“When you break down the costs, our rent only went up a little when we almost went up to three times the space,” said Douglas Lantigua, managing partner of MUSA Technology Partners. The company, which is an IT and cloud service provider to the biotech industry, moved from Inman Square to Waltham last year.
While the biotech start-up scene remains grounded in Cambridge, later-stage companies traditionally move to the suburbs, where they can find larger office and manufacturing space at more affordable rents. The real estate model shows little sign of changing despite the increasing popularity of urban, transit-friendly workspaces.
After mapping where its key executives lived and discovering that Waltham was the epicenter, MUSA relocated from Cambridge’s Inman Square to 330 Bear Hill Road in Waltham last year. The property is served by shuttle buses connecting to the Alewife MBTA station, but none of the company’s employees uses mass transit, Lantigua said.
A bigger consideration was the landlord’s willingness to modernize MUSA’s 4,000-square-foot space in the 14-year-old building as a tenant improvement included in the four-year lease.
“We got to help design everything from the rugs to the color of the walls to how the offices were laid out,” Lantigua said.
Many of the company’s core clients have moved to the suburbs in recent years, and the Waltham office is close to MUSA’s data center on Second Avenue, Lantigua said.
Landlords Reinvesting
Other Route 128 landlords have undertaken major renovation projects in response to the increasing popularity of open and collaborative workspaces.
Boston Properties Inc., which owns the 1-million-square-foot Bay Colony Corporate Center in Waltham, is nearing completion of renovations to the four office buildings on Winter Street. At 1100 Winter St., floor-to-ceiling windows were installed on the side overlooking the Cambridge Reservoir. Offices were renovated with open floor plans.
The cost of the renovations at Bay Colony was $25 million, according to a Boston Globe report. Boston Properties declined to comment.
The upgrades have attracted such new tenants as AMAG Pharmaceuticals, which moved from Lexington to 1100 Winter St. last year. AMAG will pay $1.1 million in annual rent for the 32,217-square-foot space, according to an SEC filing.
Scott Holmes, AMAG’s vice president of finance, said Boston Properties’ upgrades to the property were a selling point.
“It’s a considerable investment in the park. The common spaces are far more open and inviting,” Holmes said.
Many life science start-ups move to the suburbs when they bring FDA-approved products to market and need more office space for sales and marketing teams. Before moving to Lexington in 2008, AMAG was based in Cambridge.
“Once you have an operation that includes full commercial functions, you end up with space requirements that lead you to move outside of Cambridge,” AMAG’s Holmes said. “The rates in Cambridge are dramatically different.”
Average Class A office rents in East Cambridge at the end of the first quarter were $57.85 per square foot, compared with $28.61 in Waltham, according to commercial real estate brokerage Cassidy Turley.
The opportunity for Waltham landlords is to attract larger users looking for cost savings, said John Boyle, a senior managing director for Cassidy Turley.
“With the rents where they are in Cambridge and downtown, Waltham is going to look very attractive to large companies looking to scale,” Boyle said.
Peter Abair, director of economic and global affairs for the Massachusetts Biotechnology Council, expects demand from biotech users to drive an upcoming wave of office-to-lab conversions on Route 128. Few lab spaces above 30,000 square feet are available for lease in the western suburbs.
“For companies that may already be out in MetroWest and need bigger spaces, lab conversions are where the opportunities are,” Abair said. “There’s not a lot of available lab space, price is moving up, and so it’s more likely we’ll see these conversions take place.”
Email: sadams@thewarrengroup.com
