Life Science's Next Hot Market?
Life science is so strong that King Street Properties principal Tom Ragno would even consider scouting inside the Seaport District, which wasn't on his radar two years ago. (To be fair, quinoa wasn't on anybody's radar two years ago, and now it's mainstream.) Find out where even more folks are looking at our 4th Annual Life Science Summit on April 29 (register here).
Now that Vertex Pharmaceuticals’ nearly 2,000 staffers are completing their move into the 1.1M SF complex The Fallon Co developed on Fan Pier—and Fallon has already sold the $900M project for $1.1B—prospects for the region’s life science industry are shifting. Tom, who’s speaking at our event and is normally focused on Cambridge and Lexington properties, says he'd consider the Seaport for possible deals. In the next two years, he wouldn't be surprised to see another build-to-suit for a company that couldn't find what it needs in the area’s more traditional life science locations: Cambridge, the LMA, and Boston Medical Center in the South End.
Unlike other cycles, tenants of all sizes—not just the big players—are leasing space, says Tom’s partner, Stephen Lynch. This illustrates the market’s depth, staying power, and justifies King Street’s strategy of buying into vacancy in established life science locations. The financial world—venture capital, capital markets, and institutional investors—are creating the best financing environment in five years, he says. Science is moving faster as a result of DNA mapping, and the country's aging population is eager for access to the new therapies. (We're gonna live forever!) Tom expects life science rents to continue rising while the region’s barriers to entry stand tall for all but a handful of developers and investors who can surmount them.
HFF senior managing director Fred Whitman and managing director Greg LaBine say that as the Vertex complex (above) fills up, life science lenders, buyers, developers, and tenants are becoming more comfortable looking at the Seaport; it’s no longer seen as a pioneering location. Tenants who have clustered in East Cambridge and the LMA are beginning to break out. For lenders and investors, life science is now a more acceptable product, Fred says. The problem: Land is being quickly gobbled up by primary office tenants like Goodwin Proctor and PwC.
Tom, a brave soul, has done pioneering life science projects in West Cambridge and Lexington. (Obviously fearless, he also confesses to being a Yankees fan. He is this way, he says, because “I was born in the great state of New Jersey.” He did the relo here to study engineering at MIT.) In May, he expects to close on King Street’s $100M purchase from Pfizer and a redevelopment project at 200 and 87 Cambridge Park Dr near the Alewife T-stop.