Boston's Labs Are Full, Rents Spike Over $100/SF With No Sign Of Stopping
Boston’s life sciences spaces are 99.9% occupied in the city's urban core, and the total lack of availability has driven rents to spike to previously unthinkable heights.
Companies signed a combined 1.9M SF worth of deals last quarter, and vacancies dropped to 0.3% in Cambridge and 0.1% in Boston, according to CBRE’s Greater Boston Life Sciences Figures Q3 2021 report, released Thursday.
Average asking rents in East Cambridge, which includes Kendall Square, reached $123.09 per SF triple-net, a jump of nearly 24% over the past two years. Overall, Cambridge asking rents rose 6% just from the previous quarter to hit $112.79 per SF.
In Boston, lab rents have also eclipsed the triple-digit mark at an average of $100 per SF triple-net, while the Seaport shows average asking rents of $103 per SF triple-net, a 23.4% increase in just the past year.
The dynamics are forcing growing life sciences companies, spurred by record-setting private and public funding, to either make compromises on size, location or length of lease, said CBRE Executive Vice President Eric Smith, a member of the firm's Boston consulting practice.
“People are between a rock and a hard spot, trying to identify solutions between now and Q4 '22, especially for earlier-stage companies looking to get up and running as soon as possible,” he said. “Those tenants don’t have the benefit of time.”
Developers are scrambling to meet the exploding life sciences demand, with 10M SF of new development and office repositioning set to deliver by the end of 2023. The construction is hardly a relief valve — of the 1.4M SF expected to deliver by year’s end, 98% is pre-leased, according to CBRE.
The suburbs, a discount alternative to Cambridge, today show average asking rents at nearly $82 per SF triple net, a 34.5% rise in the past 24 months.
“The mix of tenants that are currently in that market have never been as high-profile as they are today,” Smith said. “It’s not just mature companies that have outgrown Cambridge, but certainly some companies that appreciate what the suburbs have to offer.”
Moderna’s new 426K SF headquarters lease at the rising 325 Binney St. with Alexandria Real Estate Equities was the quarter’s largest deal. Fenway developments by Samuels & Associates, Alexandria and Related Cos. secured major commitments, while biotechs Resilience Therapeutics and T2 Biosystems signed 70K SF-plus suburban leases, in Bedford and Billerica, respectively.