Lab buildings in Watertown including 100 Forge at Arsenal Yards would be required to replace fossil fuel-burning building systems or make compliance payments under a proposed emissions reduction ordinance. Image courtesy of Ayers Saint Gross
Potential new requirements to discourage fossil fuel use at approximately 150 large buildings in Watertown would drive up housing costs and penalize developers of recent lab projects, opponents say.
Watertown is the latest local city to target carbon emissions from the building sector, a component of the state’s long-term climate plan. Buildings contribute 56 percent of Watertown’s greenhouse gas emissions, according to the city’s climate and energy plan.
Opponents, including a lab developer, a local housing advocacy group and condominium association representatives, say the timing is wrong for new regulations that would drive up operating and development costs.
“We have a $20 million capital investment in HVAC systems, and I can’t see why we should throw away that equipment so we should reach that goal,” Boylston Properties President Mark Deschenes told city officials at a recent hearing.
The debate pits Massachusetts’ long-term goals to eliminate greenhouse gas emissions against cost burdens upon renters, condominium owners and commercial landlords. The new requirements would burden low- and moderate-income households and worsen conditions in commercial real estate, opponents say.
Watertown has been among the communities hit hardest by the boom-and-bust in lab development over the past decade. The city’s 2.8 million-square-foot lab market has a 55.6 percent availability rate, according to brokerage Hunneman, including a 47 percent direct vacancy rate.
Boston-based Boylston Properties developed 228,000 square feet of lab buildings at Arsenal Yards, the mixed-use project on the former Arsenal Mall property, during the past five years.
“That equipment has an expected lifespan of 35 to 40 years, and we are not going to change 14 boilers to electric in the next five years,” Deschenes said.
Housing Advocate Predicts ‘Two-Tiered’ System
The proposed ordinance is in the early stages of review by the Watertown City Council. It includes new reporting and phased emissions reduction requirements for large buildings, beginning in 2027.
Unlike similar ordinances in Cambridge and Newton, the Watertown version also applies to multifamily residential properties.
Landlords will pass along the additional costs to renters, predicted Sam Ghilardi, a steering committee member of the Watertown For All grassroots advocacy group, urging officials to delay the residential requirement for five years.
As proposed, the ordinance would create a “two-tiered system” that exempts single-family homeowners, Ghilardi said.
Median asking rents in Watertown have risen 4.5 percent in the past 12 months, according to ApartmentList, to $2,003 for a one-bedroom unit.
A condominium association representative also warned that compliance requirements would be burdensome, since individual unit owners would be required to submit historic energy usage.
“Many of them are in their 80s, are elderly or handicapped. This is something they are not going to be able to provide to us, no matter how much we try,” said Robert Pyne, representing the Crossroads at the Charles condominiums.
A rendering shows a notional build-out under the form-based zoning adopted by Watertown officials Nov. 14, 2024 as part of the city’s MBTA Communities law compliance. Image courtesy of the town of Watertown
Big Reductions Sought in 2030
A product of Watertown’s Environment & Energy Efficiency Committee, the draft version of the ordinance requires property owners to report total energy consumption as a benchmark beginning in June 2026. The baseline data would be based upon 2025 and 2026 calendar year data.
Commercial buildings that are 100,000 square feet or larger would be required to reduce greenhouse gas emissions to 80 percent of the baseline by 2027 and 40 percent by 2030, according to the draft ordinance.
Commercial buildings that are at least 20,000 square feet would be required to reduce emissions to 60 percent of the baseline by 2030. Condominium buildings would be required to reduce emissions to 60 percent of the baseline beginning in 2031.
Owners could comply by converting fossil fuel-burning systems to electric or solar, or purchasing alternative compliance credits from utility companies. They also could request deferrals or hardship waivers from a compliance board appointed to enforce the ordinance.
The requirements would stress the finances of landlords and tenants, in both commercial and residential properties, two business groups warn.
“We have a strong inclination to recommend that they remove the residential requirement, as Newton and Cambridge did,” Greg Reibman, CEO of the Charles River Chamber of Commerce, said in an interview. “It seems it’s the wrong time in this environment to make housing less affordable, or to drive up expenses.”
Doug Orifice, co-founder of the Watertown Business Coalition, predicted apartment landlords will pass along increased costs in the form of rent increases and potentially harm small businesses and commercial tenants.
City Manager George Proakis said he has asked the City Council for guidance on next steps for the ordinance’s review.
Steve Adams
Slow Recovery Forecast for Lab Buildings
Watertown’s lab market emerged in the previous decade when growing biotechs had few options to lease space in Cambridge, but local biotechs haven’t escaped the recent industry headwinds tied to declining venture capital investment.
Lyra Therapeutics, a tenant at 480 Arsenal Way, laid off 75 percent of its workforce last fall and put its 27,311-square-foot offices and labs at 480 Arsenal Way up for sublease.
And plans for new buildings are on hold, while developers wait for the surplus of lab space to diminish.
“The recovery for the suburban life science market is going to be on the tail end, versus your core primary markets,” Hunneman Director of Research & Strategy Mark Fallon said. “Maybe the prime class A product in Kendall Square is still out of their budget, but there’s sublease space [in Cambridge] with good term left on it that is definitely still attractive.”
In all, 11 lab buildings approved in recent years have failed to break ground, Proakis said, including five buildings in the master plan for Alexandria Real Estate Equities’ redevelopment of the Arsenal Mall property.
The declining values of lab development sites prompted the city to move to acquire one such property, the former F.D. Sterritt Lumber Co. at 148 Waltham St.
Burlington-based Nordblom Co. acquired the property in 2019 for $6.2 million, according to property records, but decided not to pursue a 74,000 square-foot lab project.
The city signed a purchase-and-sale agreement to buy the 2.6-acre property for $9.2 million, while it studies potential long-term uses.
