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BioMed Dropped $625M On A Big Boulder Bet. Here's How Leasing Is Looking

In just over two years since BioMed Realty acquired the 1M SF Flatiron business park in Boulder, Colorado, leasing has fallen flat, with just 50K SF of life sciences tenants signed this year.

The life sciences-focused REIT, which is owned by Blackstone, has also signed an extension on a $2.9B loan originated by Deutsche Bank. The note was originally set to mature last month but has been extended until May 2027.

In a series of statements provided to Bisnow last week, BioMed didn't name the tenants that make up the 50K SF in life sciences leasing this year. That square footage is roughly enough to fill up one of the 22 buildings on the campus. The firm declined to answer questions about the development’s overall vacancy rate but added that “we are engaged in discussions with prospective tenants for our Velocity Labs offering,” BioMed’s branded line of move-in-ready lab spaces.

The only press release BioMed has issued about Flatiron Park this year was about a project to install a pollinator garden on-site.

Flatiron Park in Boulder, Colorado

The $625M deal for Flatiron was the biggest in a bevy of market signals suggesting Boulder was poised to see significant life sciences growth. In June 2023, BioMed President of West Coast Markets Jon Bergschneider said the company would double the development’s lab space from 25% to 50% and convert additional adjacent buildings it picked up for larger tenants. 

Like the rest of life sciences real estate, Boulder has slowed, CBRE Senior Vice President Erik Abrahamson said. Many projects proposed or greenlighted during the peak of the market in 2021 and 2022, when vacancy rates were low and venture capital funding in the industry was skyrocketing, are now entering the market during a period of decreased funding, lower demand and financial challenges.

For example, in San Diego, one of the top three markets, the $1.6B, 1.7M SF Research and Development District by IQHQ has yet to sign a life sciences tenant, despite being set to open soon.

Like so many other life sciences startups, those in Boulder are “trying to make dollars last longer and delay any major moves,” Abrahamson said, meaning fewer, smaller leases. The city has a venture-based life sciences market, he added, as opposed to many core biotech cities that attract institutional support and federal research dollars.

There haven’t been any new developments in the market over the last 18 months, and 60K SF of spec suites were finished in Boulder in the first quarter, with just 9.1% pre-leased. The vacancy rate in the Denver-Boulder market is 9.6%, with 429K SF under construction, according to CBRE. 

CBRE found just 49K SF of total leasing in Q1 across Denver and Boulder, a figure that includes a 25K SF renewal for KBI Biopharma and an 11K SF renewal and expansion for Watchmaker Genomics, both tenants of Flatiron Park. No other leases from Flatiron appear in the latest CBRE market report.

When asked if these renewals were part of the 50K SF of total leases this year, a BioMed spokesperson said, “Currently, we aren’t providing that level of detail.”

The report also lists substantial square footage set to enter the Boulder market, including 280K SF at Element Research Center set to open in Q4 and 85K SF of additional spec space at Flatiron that was scheduled to be complete in Q2. 

Abrahamson did point to some positive signs in the local biotech ecosystem. Earlier this month, Enveda, a local startup that uses artificial intlligence to develop therapeutics, announced a $55M Series B fundraising round, and in January, Bay Area-based Standard BioTools acquired SomaLogic, a Boulder firm that focuses on protein biomarkers, in a $1B deal.