The Massachusetts Institute of Technology’s commercial real estate arm secured permits to build a 418,000-square-foot office and lab building in Cambridge last week. Just don’t expect construction at the 650 Main St. site to start anytime soon.
“At this point, we plan to hold off on construction,” said Michael Owu, the MIT Investment Management Company’s director of real estate. “There’s not a whole lot of demand in the market right now. We wouldn’t consider building the above-grade portion on spec.”
Owu said the shell space, which will be built to a LEED Silver level, will be scaleable to accommodate a number of office and lab configurations. And the building was designed in two wings, so it can go up in phases, if need be.
Still, Owu said the construction timeline is open-ended. MIT has several months of design and engineering work ahead of it, and during that time, it will look to sign an anchor tenant. And if that doesn’t happen, the waiting game will be on.
“The lead tenant would have to be significant enough to put a shovel in the ground,” Owu said. “There’s no hard and fast number – it depends on who the tenant is.”
Cambridge’s lab market is currently in a strange place. Deal velocity has been light, and nearly all the users in the market have small space requirements, at or under 10,000 square feet. Availability is at 17 percent and rising, according to Jones Lang LaSalle, but the market is deceptively tight. Half of all available space is either old and obsolete, or new shell space; in either direction, entry costs are prohibitively high.
MIT’s 650 Main St. building will have plenty of competition. BioMed Realty currently has upwards of 300,000 square feet in shell space sitting empty at 301 Binney St., and the REIT is preparing to deliver a 278,000-square-foot shell at 650 East Kendall St. later this year. That building has had no pre-leasing activity. Alexandria Real Estate Equities is seeking permits for a $1-billion project that would deliver 1.6 million square feet of lab space, as well as residential.
