Peter Abair

Back in the day, pioneers in the development of commercial laboratory space, such as David Klem of the old Athenaeum Group and Lyme Properties and Bill Cummings, had to be smart, had to take on risk, and had to be very patient with biotech industry of the 1980s and 1990s. Not every lab developer of the era survived, but Klem and Cummings were among the first generation of local risk-takers who developed the lab market into which the nascent biotech industry grew. The evidence of their success is in the numbers – there is more than 21 million square feet of commercial laboratory space in Massachusetts today.

While Cummings Properties remains a key player, with a near dominant position in the north of Boston lab market, many locally developed lab spaces have found their way into the portfolios of two global firms, Alexandria Real Estates Equities and BioMed Realty Trust. While both are headquartered in California, each has outstanding local teams in place with broad and deep experience in the area’s bioscience cluster. Alexandria operates over 4 million square feet of lab space and BioMed holds 3 million square feet in Massachusetts.

With so much lab product in the hands of these global giants, one could wonder what the opportunity is for local-based developers. Enter Tom Ragno and Stephen Lynch of King Street Properties. King Street was founded in 2002 by Ragno, who cut his real estate teeth at The Beacon Cos. Lynch, who began his career at The Codman Co. and later led the formation of the commercial brokerage firm Lynch Murphy Walsh and Partners, joined Ragno at King Street in 2007.

King Street saw an opportunity in the area lab market just as other local developers, such as Lyme, were yielding space to national firms. “Alexandria and BioMed are great organizations with nice spaces,” Ragno said, but “we perceived a gap in the market, which local-based entrepreneurial lab development could fill.”

King Street began with holdings at Bear Hill in Waltham, but as requirements for more and bigger space followed, King Street searched for additional suburban lab projects. King Street acquired 101 Hartwell Ave. in Lexington and repositioned it for life sciences uses in 2010. 113 Hartwell and 4 Hartwell Place followed in 2012. King Street now operates 180,000 square feet in Lexington, fully leased to life sciences companies such as rising stars Quanterix, T2 BioSystems and uniQure.

With confidence gained from their experience in Lexington, Ragno and Lynch decided to go further.  In 2014, King Street acquired 87 and 200 Cambridge Park Drive in west Cambridge, former homes to first generation pioneer Genetics Institute and later Wyeth and Pfizer. With the $112-million acquisition of the two buildings totaling 300,000 square feet, King Street made its biggest splash in the lab market.

King Street hasn’t been the only developer acquiring space. Kendall Square is still red hot. San Francisco-based DivcoWest acquired the venerable One Kendall Square complex from Related Beal in early 2014. That entry was preceded by a month by Atlanta-based Jamestown’s acquisition of 245 First St. These arrivals come at a time when demand for lab space is near historic highs, across the spectrum of size requirements. Alexandria Real Estate’s Alexandria Center on Binney Street is nearing completion and new Alexandria buildings across the street are in the offing. BioMed just recaptured 313,000 square feet of former Vertex Pharmaceuticals space in Cambridgeport for prospective users.

However, with the rough commutes of this past winter fresh in mind and the premium pricing of Kendall Square, suburban lab players such as King Street, Related Beal, Cummings and Alexandria (which is near completion of a new building in Waltham) are likely to benefit from a growing wave of prospects looking their way. King Street’s recent successes highlight the opportunities beyond the core Kendall Square market. For municipalities seeking to become destinations for life science companies, there is no better advice that getting to know these suburban developers. Lab development is still not for the novice of the faint of heart, but with a booming industry, more encouraging financial markets and deep local expertise, pathways to success are more apparent than ever.

Peter Abair is director of economic development and global affairs at the Massachusetts Biotechnology Council (MassBio).