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Coronavirus Research And Development Driving Even More Demand For Boston Lab Space

Massachusetts life sciences firms are on the hunt for additional laboratory space in the Boston area to accommodate their research into potential coronavirus vaccines and treatments.

The International Place towers, center, in Boston

Cambridge-based Moderna and Alnylam Pharmaceuticals have taken on nearly $2.5B in investment to spur therapy and vaccine-related research, adding fuel to the red-hot demand engine of life sciences in Boston.

Moderna recently received $483M in federal funding to develop a coronavirus vaccine and has said it plans to hire 150 people. Private equity giant Blackstone plans to invest $2B in Alnylam, which will provide the company with funds to bring late-stage development drugs to the market faster. Alnylam and partner Vir Biotechnology recently announced they were going to develop therapeutics to treat COVID-19 and other diseases caused by coronaviruses.  

"Those two companies are looking for space now," Newmark Knight Frank Research Director Elizabeth Berthelette said.

Moderna’s corporate headquarters, platform, drug discovery, manufacturing process development and clinical development operations occupy 200K SF in a multi-building campus in Technology Square in Cambridge. The majority of those facilities are leased through 2029 with the option to extend.

The biotech company has a 200K SF manufacturing facility in Norwood that is leased through 2032, which Moderna has options to extend for two 10-year terms. Norwood also is where Moderna signed a lease in February 2019 for 222K SF of office and laboratory space.

Alnylam leases more than 500K SF of office, laboratory and manufacturing space at four locations in Cambridge, including at its headquarters in Kendell Square. It also has a 200K SF manufacturing facility under construction in Norton. 

Moderna and Alnylam might be the most public examples of immediate space requirements driven by the need for remedies and vaccines to fight the coronavirus, but they aren't the only ones.

"There are also other firms that are actively working with tenants with a similar need driven by COVID," Colliers International Director of Research Aaron Jodka said.

Developing lab space in the region is being hampered by Boston Mayor Marty Walsh's decision to halt all nonessential construction projects not related to housing or infrastructure. Neighboring cities like Cambridge and Somerville have similar moratoriums. 

The region's limited supply of inventory, especially in Cambridge, the epicenter of the life sciences industry because of its proximity to Harvard University and the Massachusetts Institute of Technology, has also become tighter lately.  

Cambridge's Kendall Square is the heart of the life sciences industry in Greater Boston.

Newmark Knight Frank estimates that net absorption for lab space in the Boston area rose to 889K SF in the first quarter, one of the largest quarterly totals on record.   

The company attributes the gain to "[a] near-insatiable demand for new construction, especially in Cambridge, where vacancies have stood in the low-single digits for three years."

West Cambridge has gotten built up in recent years, but a lot of the space coming online lately has been pre-leased, Berthelette said.

"If you have a tenant that needs something now, you have very few options in Cambridge,” she said.

Life sciences companies squeezed out of Cambridge have flocked to Boston’s Seaport neighborhood and neighboring South Boston, traditionally a residential community.

Some property owners are converting office space to meet the demand for labs. Among the more notable conversion projects are 601 Congress, where multiple floors may be changed for life sciences tenants. Nan Fung Life Science Real Estate plans to convert 51 Sleeper and 1 Winthrop Square to "plug-and-play lab space."  The Hong Kong investor spent $190M on both properties.

Lab demand remains strong in Boston suburbs like Watertown, which has become a life sciences hub. SQZ Biotech, Kymera Therapeutics and Aileron Therapeutics are among the companies that have either moved to Watertown or announced plans to do so.

"There were just a handful of life science investors in Greater Boston at the beginning of the cycle, but that number has quickly ballooned to try to keep pace with demand," Colliers said. "New markets are being unlocked as well, including incubator and small lab offerings in Natick from Abi-Labs."

Officials from Moderna and Alnylam didn’t return messages seeking comment.