Alexandria Real Estate Equities has sold off around $1 billion in local properties in 2023, in one case accepting half of what it paid a few years ago for prospective lab conversion in Newton. iStock illustration

The last few months have been busy ones for lab development giant Alexandria Real Estate Equities, which has been scrambling to sell off would-be project sites and life science buildings from the Seaport to Waltham.

And the decision by the California-based real estate investment trust to dump a significant slice of its Boston-area portfolio speaks volumes about the state of the local lab market, none of it good.

Alexandria unloaded around $1 billion in local properties in 2023, including a pair of Seaport development sites, part of its new Fenway life science tower, Newton’s Riverside Center and five life sciences buildings in Waltham and Cambridge.

In the case of Riverside project, hard by the Newton Green Line hub, life science REIT sold an office complex which it had hoped to convert into labs at a fire sales, accepting $117.5 million – half of what it paid just a few short years ago.

Alexandria’s rush to sell represents a dramatic shift, with the real estate firm voraciously acquiring new development sites and life sciences buildings across Greater Boston right into 2022.

That expansion – for now, anyway – is history as Alexandria adjusts to a major downturn in the once-booming lab development market, one that is hitting the Boston area particularly hard.

Boom Turns to Rout

During the boom times, developers rolled out plans for more than 90 million square feet of new lab and research space in Cambridge, Boston and their suburbs that together make up one of the world’s top life science hubs, roughly tripling the current amount.

While the numbers certainly seemed eye-popping, they weren’t necessarily crazy either, given the demand, with pharma giants and small biotech companies on track as recently as last year to hire another 40,000 workers locally.

But after peaking at $50 billion in 2021, venture capital funding for life sciences companies began to fall in 2022 amid stock market volatility, with the Federal Reserve’s interest rates hikes to combat inflation and Russia’s invasion of Ukraine leaving investors spooked as well.

By 2023, the industry’s much-ballyhooed expansion in the Boston area had turned into a rout, with life sciences companies slashing not quite 3,800 jobs in the Boston area last year, according to the Boston Business Journal.

And all those job cuts, combined with the millions of square feet of new lab space developers like Alexandria had rolled onto the market in the last few years, combined to send vacancy rates soaring for that real estate.

Just a few years ago, available lab space was extremely hard to find, with the vacancy rate in Kendall Square just about zero. Now the vacancy rate across the Boston area is approaching 12 percent, with more than 5 million square feet sitting empty, according to Colliers.

That’s up from just 300,000 square feet in 2021.

Simple Overexpansion?

Still, while the retrenchment and cuts locally are being mirrored in other major life sciences research hubs, Alexandria is taking much more aggressive steps to cull its local portfolio, compared to other markets.

Alexandria sold more than $1.5 billion in real estate in 2023. However, almost two-thirds of those sales came from the Boston area.

That certainly should raise both questions and concerns about exactly what is driving this much more aggressive approach.

Maybe it’s just a case where Alexandria believes it simply overexpanded in the Boston area and is now trying to rebalance its portfolio.

After all, everyone and their brother was eager to snap up and build as much lab space as possible in Boston, Cambridge and their environs, which has emerged over the last decade as the global place to be for life sciences researchers.

Yet there is another, more disturbing possibility: Alexandria sees significantly greater risk – and downside – in the Boston area compared to other markets.

Or Is There a Problem for the Region?

At first glance, the numbers, at least when it comes to vacancies, would not seem to support this theory.

San Francisco, which has the second-largest life sciences sector in the country, has a lab vacancy rate that tops 15 percent – considerably higher than the Boston area.

San Diego, the third-largest lab cluster, mirrors Boston with an 11.8 percent vacancy rate

Yet a report issued last summer by Jonathan Litt, a notorious short-seller who has targeted Alexandria, offers come clues to Alexandria’s determination to slash its Boston-area portfolio, even if it means taking big losses.

Scott Van Voorhis

The REIT’s Boston-area properties have taken the biggest hit from the life sciences downturn, with the amount of available space at the company’s properties topping 21 percent as of last June, according to a report issued by Litt’s investment firm Land and Buildings.

That’s up from 13 percent in 2021. By contrast, the amount of empty lab space in Alexandria’s San Francisco holdings comes in at a somewhat lower 18 percent.

In San Diego, the amount of available space is 9 percent, much higher than it was before, but far lower than in Alexandria’s Boston area properties.

The number of cell phones – a proxy for people – in use at Alexandria’s lab buildings has also plunged.

And here again, the company’s Boston-area properties have led the way again, with a drop of 56 percent in the number of workers commuting each day to Alexandria’s lab buildings compared to pre-pandemic times, according to the report by Litt’s firm.

It would be a stretch to say that Greater Boston’s lab market has gone from first to worst. But Alexandria’s local market moves may point to a deeper and more protracted downturn in the local lab and life sciences market than what the conventional thinking would suggest.

File under: Look out below.

Scott Van Voorhis is Banker & Tradesman’s columnist and publisher of the Contrarian Boston newsletter; opinions expressed are his own. He may be reached at

Is Something Frightening Hiding in REIT’s Retrenchment?

by Scott Van Voorhis time to read: 4 min