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The developer of Assembly Row is asking for an extension on a new lab development due to economic conditions and lack of demand.
Federal Realty Investment Trust executives filed a request with the Somerville Planning Board for an extension on its special permit for its 350 Assembly Row lab project. The company said it is seeking a two-year extension on its permit because of challenges that have delayed its timeline, according to the May 19 filing.
"The Applicant has faced hardship in pursuing the project in the form of difficulties associated with the rise in interest rates, increase in construction costs, and an oversaturation of lab product in the region," Federal Realty Senior Director of Development Sarah Rogers wrote in the filing.
The firm filed plans in 2022 for the seven-story, 381K SF lab building at its major mixed-use complex in Assembly Square. The company's special permit, granted in May 2022, was set to expire on Sunday, the Banker & Tradesman first reported.
Federal Realty isn't the only developer in the area feeling the pressures from the life sciences slowdown.
BioMed Realty's Assembly Innovation Park and Greystar's 74M tower are soon to come online but have yet to announce any tenants, according to Banker & Tradesman. Last year, a local auto body shop owner on Union Square reached a deal with DLJ Real Estate Capital Partners and Leggat McCall Properties to sell the shop so it could be turned into lab space, but the deal fell through, the Boston Business Journal reported.
Across Greater Boston, there was 9.7M SF of life sciences space under construction and over 2M SF delivering at the end of the first quarter, according to CBRE. Though leasing saw a slight uptick of just over 800K SF, the amount of new supply is still far greater than tenant demand. CBRE reported that lab vacancy has increased for eight straight quarters to 13.7%.
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