Development Bets Gone Bust Leave New Buildings Empty Across Boston Suburbs

Driving down the highway in Boston's suburbs reveals the remnants of the region's once-promising life sciences boom.

Large gleaming towers boasting millions of square feet of lab space dot the suburban landscape, but while thousands of people drive by them every day, few people enter.

Many lab buildings developed across the region over the last five years remain vacant, including a pair of buildings rising 15 and 12 stories that Greystar and BioMed built near Somerville’s bustling Assembly Row district.

Cities like Somerville and Watertown seemed like sure bets for lab developers during the height of the pandemic-era life sciences construction craze, as they saw spillover demand coming from the industry epicenters in Boston and Cambridge, where vacancy rates stood near zero.

Many of those developers broke ground speculatively, as growing life sciences companies often need move-in-ready space, and builders felt confident the demand would be there when their buildings opened. They were wrong.

Just over one-third of all life sciences space in Greater Boston — the largest lab market in the country — sat vacant at the end of the third quarter, according to Cushman & Wakefield.

Vacancy is highest in the urban ring, a submarket Cushman defines as Watertown, Somerville, Allston, Brighton and Fenway, which has 11.7M SF of lab space. At the end of September, roughly 55% of it was available.

"I don't think people really recognize, just on the macro scale, how much new construction we've had in communities like Somerville, Watertown and places like that," said Colliers Research Director Jeff Myers, noting Greater Boston built more during the last cycle than the entire inventory of competing market Raleigh-Durham. 

"We really, really, really built a lot," Myers added. 

Across the country, lab buildings developed between 2022 and 2024 remained around 48% vacant as of the second quarter, according to JLL. The firm found 4M SF of lab space nationwide that has gone through financial distress or pivoted to another property type this year.  

The Greater Boston market has the most lab space in the country with 56.7M SF as of the end of 2024, according to Colliers. That was just more than No. 2 San Francisco's 55.1M SF but far above the next highest markets — San Diego, Philadelphia, New Jersey and Raleigh-Durham — which stood between 18M SF and 25M SF. 

Myers and other leasing experts told Bisnow that as vacancy continues to rise, more financial distress will play out in cities like Somerville that are home to several vacant buildings. The owners of these properties are competing with the region’s well-established clusters that now have much more space available than they did a few years ago.

More than two-thirds of the 1.6M SF of leasing activity in the region through the first three quarters was concentrated in Cambridge, according to Cushman & Wakefield.

"Those pockets in Somerville and Watertown did emerge, and that's why there's so much new construction there," Cushman & Wakefield Senior Research Manager Riley McMullan said. "Because of that, when demand sort of fell off, when it returns, those tenants really want to be in those epicenters that didn't have that availability."

In Somerville’s Union Square, developer US2 and partner Affinius Capital broke ground on a $2B, 15-acre mixed-use development in 2021. The master-planned project included a 196K SF lab building at 10 Prospect St. that was completed in 2024. The developers haven't announced any leases since opening.

The team behind another 336K SF project in Somerville also hasn’t announced any leases since opening. The project from CV Properties and Cannon Hill Capital Partners known as Boynton Gateway opened in the latter half of 2024.

One Somerville project from Leggat McCall, the 101 South building completed in 2022, has fully leased up, but the developer is still searching for tenants for a second building constructed next door, 808 Windsor.

"808 Windsor was completed last year and is currently unleased but has generated strong interest from growing tenants of 101 South next door and from the broader market given the quality of the improvements and the location within one mile of Kendall Square," Leggat McCall Executive Vice President Robert Dickey wrote in an email to Bisnow.

In Watertown, Spear Street Capital won approval in 2021 for its redevelopment of the former Tufts Healthcare buildings into life sciences space. Since opening, the 550K SF life sciences campus hasn't announced any leases, with the majority of the building still marked as available on its website.

US2, Spear Street Capital and CV Properties didn't respond to Bisnow's request for comment.

"It's quite clear to me that there's a sizable portion of the existing lab inventory that is never going to be leased up as lab space, and it's going to need to be repurposed," JLL Executive Managing Director Bob Richards said.

Demand has lagged due to the continued slowdown in venture capital funding, which biotech companies rely on to fund their research and growth. VC funding for Massachusetts-based biotech companies totaled $2.75B through the first half of 2025, down 17% from the same period last year, according to MassBio.

"This time last year, we were optimistic that the biotech industry and the global economy had reached the bottom of their downturn," MassBio CEO Kendalle Burlin O'Connell said in the report. "There were some indications that interest rates would fall, a few more exits would begin to happen, funding would loosen up, and M&A activity would return to a healthy level. That did not happen."

Without as much VC funding, life sciences companies are focusing less on growing their real estate footprint, leaving less demand for the enormous amount of lab space on the market.

Due to the glut of life sciences space in the market, Myers said he expects to see more owners face financial distress in 2026 as some buildings remain vacant longer and loans begin to mature. As has happened in the office market, the vacant buildings could be sold at steep discounts, allowing new owners to offer more affordable rents. 

"The new ownership of those buildings, to consider their ability to offer market rents that would be lower than they had been for the previous owner, and maybe that would help them to get a leg up on attracting tenancy," Myers said.

The distress has begun to unfold outside of the urban core.

In May, MetLife Insurance sold a 109K SF life sciences building in Burlington  to Northeastern University for $33M. MetLife acquired the building, known as the Burlington BioCenter, for $103M in 2022. The property had been leased to three companies but since the acquisition, two tenants have vacated.

In July, a 284K SF Wellesley life sciences building sold in an auction for $65M back to its lender Liberty Mutual. The Wellesley Gateway North had been owned by Beacon Capital Partners, which acquired the property in 2021.

JLL's Richards said although the market is gloomy right now, there could be hope for markets outside of the urban core, especially if more tenants start looking for big blocks of space that aren't as available downtown. He also said established companies headquartered outside of Cambridge are less likely to move to Kendall Square and Boston.

"I don't see the market improving significantly in the next 18 to 24 months," Richards said. "Root for small wins over the next year or so."