99 Coolidge Ave. in Watertown. Photo courtesy of Alexandria Real Estate Equities
Demand for lab space rebounded in recent weeks, but much of life science tenants’ leasing activity gravitated to suburban properties rather than the East Cambridge industry epicenter.
The uptick in demand still leaves a vast surplus throughout Greater Boston’s lab market, with 16.7 million square feet of availability and roughly 2.1 million square feet of demand, JLL reported.
Recent leasing activity has gravitated toward Waltham – where six of 19 lease transactions took place in the second quarter – along with Watertown and West Cambridge.
In a departure from the tight market prior to 2022, multiple options are available in East Cambridge.
“Now, you have 3.1 million square feet of lab space [available] in East Cambridge, and you certainly see many landlords are aggressive and willing to meet you at the market. But for whatever reason, tenants are exploring options that aren’t Kendall Square,” said Mark Bruso, director of research for JLL Boston.
Notable suburban transactions during the quarter included Abbvie’s 83,200 square-foot renewal at 830 Winter St. in Waltham, Foghorn Therapeutics’ 72,700 square-foot lease at 99 Coolidge Ave. in Watertown and AVS Pulse’s 40,500 square-foot sublease at 180 CityPoint in Waltham.
The vacancy rate stood at 32 percent region-wide in the second quarter, according to JLL data.
Since June, several global life science companies have begun touring the market for a combined 920,000 square feet of space, including some that are downsizing or scouting the market for similar-sized space, according to JLL. The tenant-friendly market is prompting mature companies to upgrade to higher-quality space, Bruso said.
The industry continues to face financial headwinds, with 18 local companies announcing layoffs totaling 1,300 jobs in the second quarter, CBRE reported. Some 19 percent of the lab space in East Cambridge is available, including 14.4 percent in direct vacancies.
Uncertainties surrounding tariffs and future National Institutes of Health funding levels are prompting companies to take a cautious approach to real estate decisions, the brokerage report said.
Vacancies crept up in Boston to 24.6 percent, CBRE reported, as developer IQHQ delivered its 109 Brookline Ave. lab tower in the Fenway without any tenants. The Fenway has the highest availability rate of any Boston submarket at 44 percent.
The Boston Seaport market had a second consecutive quarter of stagnation, with no leases signed. Seaport asking lab rents have fallen 20 percent since the peak in 2022, and now average $89.61 per square foot, CBRE reported.
Sublease listings declined slightly to 3.3 million square feet, representing 5.9 percent of the total regional inventory.
Lender-driven sales processes will become more common in the next 24 months, at buildings that are unable to attract significant leases, JLL forecasts.
