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BioMed Realty's proposed life science development at 585 Third St. in Cambridge. Image courtesy of CBT Architects
Greater Boston’s life science cluster remains an island of stability in the commercial real estate world while other property sectors reel from COVID-19 disruption.
Continuing venture capital investment in the industry has generated space requirements for as much as 50,000 square feet in Cambridge, already the region’s priciest and tightest submarket, according to CBRE’s ViewPoint report.
Signs of an economic slowdown had already started to temper demand for commercial space by late 2019, but the life science industry remained a growth area in the first quarter with more than 400,000 square feet of positive absorption in Greater Boston.
“As many office occupiers are weighing the option of allowing employees to start working from home, lab space is still highly valued,” CBRE researchers Suzanne Duca and Connor Channel wrote.
Asking rents for Cambridge lab space were $101 per square foot on a triple-net basis with a vacancy rate below 1 percent in the first quarter.
Local office demand is expected to take a hit from job losses and continuing work-from-home policies, with over 900,000 Massachusetts residents filing unemployment claims since mid-March. New office leasing had already slowed significantly in the first quarter and companies are waiting to assess the economic climate, so many tenants are considering short-term lease renewals.
Asking office rents in Cambridge and Boston had reached all-time highs at the end of 2019 at $68.28 per square foot on a gross basis, with a vacancy rate of 6.3 percent and potential tenants in the market for 5.5 million square feet of space. At the same time, suburban rents averaged $25.46 per square foot, reflecting the steady workplace urbanization trend.
Boston Properties is proposing changes to its planned development on the Blue Garage site on Binney Street that could see 800,000 square feet of office/lab space created.
Updated: 12:34 p.m., May 12, 2020: An earlier version of this article incorrectly attributed the source of its associated image. The image is courtesy of CBT Architects.
