Mark Development will ask the MBTA for a two-year extension of its deadline to acquire a lab development site in Newton in the latest sign of softening for the life science market.
The Wellesley developer had been scheduled to close next August on the $25-million transaction at Riverside station on the Green Line for its 1 million-square-foot development. The majority of the 13-acre site would be ground-leased from the MBTA.
The project, originally scheduled to begin this year, would be Newton’s largest lab development. City councilors rezoned the property in 2021 after a contentious community debate and a reduction in the size of the project from the original 1.5 million square feet.
Mark Development CEO Robert Korff cited “broader business factors facing the entire industry” in the delayed timetable.
“We are exploring a wide range of creative solutions to the challenges facing all large construction projects. It is a dynamic and evolving commercial real estate environment and we are doing everything we can to move this project forward in a timely manner,” Korff said in a statement.
In a recent update to the Riverside Neighborhood Liaison Committee first reported by local news site Fig CIty News, Mark Development said the project would begin nine months after it secures financing, and that the 550-unit rental housing component of the project could be built before any life science space.
Rising construction costs and declining investment in biotech companies have raised red flags about the future prospects for lab development in Greater Boston and other life science hubs, after several years of torrid activity.
Commercial and multifamily project costs have risen approximately 30 percent in the past year, according to local developers. Developers also face higher lending costs on construction financing.
Alexandria Real Estate Equities cited rising construction costs and supply chain disruption in requesting an extension of its special permit for a lab project at 275 Grove St. in Newton. The nation’s largest life science developer is seeking a 2-year extension through November 2024 for its special permit for the partial lab conversion of the 509,702-square-foot office complex.
Life science space requirements in Greater Boston have shrunk from 6 million square feet in 2021 to 1.9 million square feet in late 2022, according to JLL research. At the same time, there’s approximately 6 million square feet of lab development in the local pipeline.
And local life science companies have offered 2 million square feet of sublease space this year in the urban and inner suburban market, JLL Executive Vice President Carolyn Wheatley noted at NAIOP MA’s 2023 market outlook forum last week.
