Biopharma Bails On $53M Lease With BioMed Realty Trust, Gets Immediately Replaced
BioMed Realty Trust has secured a new tenant for 57K SF at one of its Kendall Square properties after letting a tenant end its lease last month without paying a termination fee.
Clinical-stage biopharmaceutical company Cyclerion Therapeutics terminated its lease at 301 Binney St. last month, it disclosed in a Securities and Exchange Commission filing. Just two years earlier, it signed a 10-year, 114K SF lease with BioMed for $90 per SF.
Cylcerion exited the lease without paying a termination fee and said it would save approximately $53M in future rent payments in the lease that was supposed to stretch to 2029. The building is still fully leased, as BioMed was able to secure a replacement tenant, which it declined to disclose, a spokesperson said.
"Existing occupiers often relocate within BioMed Realty’s portfolio, which includes 5.2M SF in the greater Boston market. While that is not the case with Cyclerion, 301 Binney St. remains fully leased," BioMed Vice President of Leasing for East Coast and U.K. Markets Colleen O'Connor said in a statement. "The demand for life science properties remains incredibly strong globally, and in particular in Kendall Square, which is driving our expanded development pipeline more regionally in Boston and Somerville.”
Cyclerion said in the filing it will outsource research and development work and lease office space on an as-needed basis. The company, a spinoff from Boston-based Ironwood Pharmaceuticals, is reeling from two failures in clinical trials last year, one of which triggered dozens of layoffs.
As of Q1 2021, the company said it has enough existing cash and cash equivalents to fund planned operating expenses through the next 12 months. A representative for Cyclerion said Monday evening the company had no comment.
The 301 Binney property spans 417K SF, includes a vivarium space for animal research and has among Kendall Square’s highest rent. Biotechnology company Scholar Rock is paying $135 per SF, part of a five-and-a-half-year lease for 51K SF signed in 2019. Other tenants include vaccine technology company Affinivax and SmartLabs, which expanded its vivarium space to 16K SF in 2019.
The life sciences market in Kendall Square has a 2% vacancy rate, high by the neighborhood’s standards, Hunneman Director of Research Tucker White said. Average asking rents have increased from the low-to-mid $90s per SF in 2019 to $110 as of Q1 2021, according to Newmark research. Cyclerion’s departure and immediate replacement shows there isn’t any sign of the market slowing, Newmark Director of Research Elizabeth Berthelette said.
“I do think we’ll see continued upward pressure on lease rates particularly in the near term,” she said. “Again, there's so few options for tenants that need space. If you look at when the deals come out in new, under construction lab space, the [rents are] likely even higher.”
BioMed Realty Trust East Coast President Bill Kane said on a Bisnow digital summit this month that 91 life sciences tenants were looking for a combined 3M SF in Greater Boston. It has moved aggressively to expand in the market, paying $362M to acquire the ground lease on the former John Hancock headquarters at 601 Congress St. and entering purchase agreements on two office buildings in the South End, with plans to build out space for life sciences companies in all of them.
UPDATE, MAY 18, 10 A.M. ET: This story has been updated with a statement from Cyclerion Therapeutics.