Newton Gets First Taste Of Boston's Juicy Lab Market. Will It Want More?
The Boston suburb of Newton had been left behind in the region’s life sciences explosion, but it is now entering the fray.
The Newton City Council approved a 63K SF life sciences build-out at 275 Grove St., also known as Riverside Center, which lab developer Alexandria Real Estate Equities acquired last year. Corindus, a Siemens company developing medical robotics, has agreed to occupy the newly built space in the 500K SF building near the Riverside MBTA Station.
The deal, approved by the 24-member city council on March 1, is a win for life sciences developers hoping their projects in Newton can catch the wave that is cresting in the Boston-Cambridge metro area. The community has a tiny lab footprint compared to its neighbors but is seen as capable of attracting life sciences companies seeking much-needed expansion.
The Massachusetts Biotechnology Council identifies the 15K SF LabShares incubator in the Chapel Bridge Park office park as the city’s most significant lab space, and a Newton official Monday said she didn’t know of a larger lab space than Corindus’ in the city.
Newton touts a Gold Rating from the Massachusetts Biotechnology Council, the organization’s second-highest designation given to cities with policies and zoning ripe for life sciences development. Watertown, just north across the Charles River, also touts the Gold Rating but has been more amenable to life sciences developments, which now total approximately 2M SF of supply either operating or in the pipeline.
“If you are open to business, if you have a Gold or Platinum rating with MassBio, that means they’re willing to bring those companies to any of the developments that are in your ZIP code,” JLL Life Sciences Managing Director Bob Coughlin said on a virtual panel hosted by the Newton-Needham Regional Chamber Monday.
Coughlin, the former longtime CEO of MassBio, said the organization only counts 16 member companies located in Newton, 15 of which are at LabShares.
“You need to create space for these companies to graduate, otherwise they are going to go somewhere else,” Coughlin said on the panel. “They already want to be there, they’re already there.”
The Corindus lease is Alexandria’s first public move at Riverside Center, which it bought from Hines Global REIT last January for $235M.
A nearby 14-acre, 10-building project from Mark Development, dubbed Riverside Station after the adjacent MBTA stop, is hoping to capture the same goodwill from city councilors next month, when it plans to bring forward a new proposal to replace an approved hotel with 100K SF of life sciences space at its site.
“After [the Riverside Station] site, there really is no scalable areas here that can be redeveloped to create an appropriate ecosystem or life science node, and it'd be a shame to miss that opportunity,” Mark Development CEO Robert Korff said.
Korff, a Newton resident whose office is in Riverside Center, said the bedroom community has been hesitant to accept development, citing the city’s unusually large council as a hurdle to gain approval for projects.
Mark Development negotiated with abutters before gaining approval in October for the 1M SF Riverside Station, which then didn’t include a lab component. Some city councilors have already expressed skepticism over Korff's proposal, calling the decision to change uses so quickly possibly short-sighted, the Boston Globe reported.
Record private and public funding in the billions of dollars has driven growing companies to prioritize speed-to-market and readily available space in their real estate hunts, and large developers have increasingly sought to convert offices into labs in and around Boston.
Suburbs like Newton offer average asking rents per SF at nearly half the rate of Kendall Square or the Seaport, and more are emerging as options as companies weigh Greater Boston's life sciences communities. Lexington-based Translate Bio last year was lured to Waltham in search of more space, while Alexandria has stayed away from the bustling Alewife suburb over transportation concerns, a representative said in a recent earnings call.
Alexandria has found success in attracting tenants to the 11-building Watertown campus it bought from Athenahealth to convert to life sciences uses, landing a biopharmaceutical lease and biomanufacturing commitment in the past few months for build-outs set to deliver within the next year.
An Alexandria spokesperson declined to comment for this story, but Hunter Kass, an executive vice president and regional market director for the REIT, spoke on the Newton panel about what makes a suburb conducive to attracting and growing a life sciences cluster.
“There’s someone in this industry that says even a 7-Eleven can be converted to a lab,” Kass told the panel. “We’ve got to be a little bit mindful here of where the right clustering can occur, and who’s the right sponsor of it, and what are the companies that are going to grow there.”
Life sciences growth needs ease of permitting and approvals, he said, all in the name of allowing tenants speed-to-market. Alexandria was able to secure a special permit approval for Riverside Center, and while Kass was hesitant to elaborate on that building's future, he said Mark Development’s Riverside Station is crucial to developing the coveted live-work-play element for a life sciences community.
The development, if its planning change is approved next month, would include 362K SF of office and lab space, 550 residential units and 21K SF of retail. The project as approved in October includes a 77K SF hotel, which Mark has eliminated from its newest proposal.
Korff has gotten calls about Riverside Station, which is next to the terminus of the D Branch of the Green Line, from e-commerce interests, and he said those inquiries have substantially increased in the last 12 months. E-commerce and logistics companies, seeking last-mile distribution facilities, have driven Boston’s airtight industrial market and are seeking some of the same spaces as life sciences’ own rising biomanufacturing requirements.
“As a resident, I'm interested in developing land for the appropriate use, and it's one that the entire community I feel can benefit from,” Korff said. “That's a tough argument to make with an e-commerce.”