The Cambridge development playbook is changing to accommodate demand in a real estate market known for perpetually nonexistent vacancies and sky-high rents.
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Life science companies continue to have growing pains in Kendall Square, the hub of Greater Boston’s life science activity. The submarket has a 0% vacancy rate, and Class-A rents are north of $100 per SF due to continued lack of supply, according to a Perry Q3 report. While cranes may dot the East Cambridge skyline with new developments, many of those projects are already spoken for.
Life science companies that need space quickly have been forced to look beyond Kendall.
“If the demand outpaces supply in East Cambridge, other centers for life sciences and tech will spring up,” said EBI Consulting Project Manager Kevin Nice, who is speaking at Bisnow’s Boston Life Sciences & The Future of Cambridge event Nov. 12. “This is not necessarily a bad omen for East Cambridge. Anything we can do to keep these companies in metro Boston is a long-term positive.”
Vertex Pharmaceuticals’ move from East Cambridge to Fan Pier in 2011 came during an era of a cross-Charles River rivalry between Cambridge and Boston, where the late Mayor Tom Menino was trying to create a Kendall-on-the-sea with the then-fledgling Seaport neighborhood. Space constraints and congestion have since turned Greater Boston’s life science approach into more of a collaborative effort than one of competition.
Cambridge officials have previously told Bisnow they recognize there is only so much room to build in their 6.5-square-mile city, so they have supported the Life Sciences Corridor, an initiative aimed at promoting collaboration among the five cities along the MBTA Red Line in pursuit of attracting life science development.
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Biotechnology firms appear to be taking heed of the message that there are other life science clusters in the region beyond Kendall. Fifty-six percent of Greater Boston’s 659 biotech firms are located outside Cambridge, according to Perry. Seventy-three percent of the life science construction pipeline, which encompasses more than 3M SF of lab space, is outside Kendall in places like Alewife, Seaport and Somerville.
“Cambridge’s focus is on the other things like the consequences of growth, infrastructure and creating more affordable housing,” said Cabot, Cabot & Forbes CEO Jay Doherty, whose firm is developing a mixed-use project in Alewife. “I don’t think they lose much sleep because of companies moving to different locations.”
That said, Alewife is still a part of Cambridge, just in a different submarket than Kendall Square. The Alewife market’s 18% vacancy rate gives life science companies room to grow — and at significant savings compared to East Cambridge. Life science rents run about $20 less per SF in Alewife than in Kendall, Doherty said.
Developers have followed suit. Along with Cabot, Cabot & Forbes’ plan for 1M SF of mixed-use development — about half of which will likely end up as life science space, Doherty said — several life science tenants like Arbor Biotechnologies and Kintai Therapeutics have signed leases at Bulfinch Cos.’ Cambridge Discovery Park in Alewife.
While there may be a sense of collaboration, developers aren't completely giving up on developing in Kendall Square.
“In the minds of tenants and owners, there is increasingly more flexibility and a willingness to work with underutilized parts of buildings,” Arup associate principal Jonathan Eisenberg said.
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With near-zero vacancies in Kendall, Central and Harvard squares, life science companies are rethinking what is acceptable space to rent. That means being willing to locate to higher floors in buildings or even in basements, if their line of work allows it, Eisenberg added.
Developers are also wooing members of the community by pitching mixed-use projects.
Lab or office buildings with a residential component or even public space integrates a project more with the surrounding neighborhood and can be an easier sell for neighbors, often one of the biggest impediments to building. Roche Bros. will open Kendall Square’s first (and long-awaited) grocery store in One Broadway. MIT’s redevelopment of the Volpe Transportation Center is expected to incorporate a mixed-use approach once it finalizes its plans.
Other projects could blend residential and lab uses under the same roof, which would provide much-needed housing to the Cambridge market and give employers an added recruiting tool.
“Employers from smaller entrepreneurs to big pharmaceutical companies would see it as a recruiting advantage,” Eisenberg said. “Prospective employees would be drawn to a facility with many amenities and a large residential component nearby or even on-site. I just think that makes a big, big difference.”
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