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Greater Boston's Strong Lab Market Charges Into 2017,

Available lab space continues to be a rarity in Cambridge, according to a new report, but one looming political fight could derail the market's hot streak.

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

The vacancy rate for labs in Cambridge sits at 0.8%, according to NAI Hunneman’s Q1 2017 Metro Boston Market Recap report. The East Cambridge submarket is at a miniscule 0.2% vacancy: only 14K SF of the nearly 9M SF total supply is available.

While rents in the neighborhood currently average $78/SF, experts expect that figure to rise into the $90s/SF when a wave of Kendall Square proposals finally hits the market. 

“The life science train doesn’t seem like it’s stopping anytime soon,” NAI Hunneman director of research Liz Berthelette said. 

Berthelette said she was surprised to see strong lab numbers extend into West Cambridge. Rents are pushing $60/SF as companies are forced to look outside of Kendall Square, which is effectively full. The space constraint is also driving speculative lab construction.

The Davis Cos. plans to add 47K SF and renovate its existing 140K SF building at 35 Cambridgepark Drive into lab space near Alewife Station. Along the Route 128 corridor, King Street Properties began construction in November on a 145K SF building at 830 Winter St. in Waltham with hopes of luring a life science user. Developers have continued to pursue companies with amenities and cheaper rents along Route 128, where lab rents average in the $30s/SF.

The Kendall Square skyline in East Cambridge

There is one caveat that could bring the whole thing crashing down. With President Donald Trump proposing a 19% cut from the $32B National Institutes of Health budget, the life science industry in Massachusetts has a lot to lose.

The state is the recipient of the highest amount per capita of NIH funding each year. Boston alone averages $1.7B in funding for such institutions as Massachusetts General Hospital and Boston Children’s Hospital. Potential cuts could stave in funding for biotech startups currently gunning for coveted space in Cambridge. 

“Considering Boston has been such a large recipient of funding, there would have to be a trickle-down effect,” Berthelette said.

Stressing the number of private biotech companies in the area, she said Cambridge should be able to maintain its low vacancy rate. The market is playing a game of life science musical chairs: If one company leaves a space, another immediately swoops in. Regarding the longevity of this low-vacancy scenario, it appears even more companies from around the world are looking to move in. 

“There are a lot of global companies that aren’t in Cambridge yet, but they’re probably coming,” she said. "Everyone wants to be there."