Cambridge Lab Vacancy Still Low, Despite Glut of New Construction

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Article courtesy of Cresa Boston

With countless developments in process in East Cambridge, the skyline there now has a new fixture: cranes. Two new buildings – 300 Massachusetts Avenue and 75-125 Binney Street – were completed in the first half of 2016, and now have occupants. We might assume that in a tight market like Cambridge – where there is limited availability – new buildings being occupied are a sign that space elsewhere is being vacated, opening up new opportunities for other tenants in the market. Unfortunately, that may not be the case with the new buildings at either 300 Massachusetts Avenue or 75-125 Binney Street.

That’s because in both cases, the tenants are staying in their old space as well as occupying the new one. Before they moved into 250,000 SF of sparkling new lab space at 300 Massachusetts Avenue, Millennium Pharmaceuticals was leasing exactly twice that amount of space from Forest City in other buildings within the University Park complex. Don’t expect Millennium to let any of their old space go, as their built-to-suit development at Massachusetts Avenue appears to be purely an expansion project.

Similarly, when Ariad moved into its portion of 75-125 Binney Street, the assumption in the market was that, once they occupied, they would leave 26 Landsdowne Street, where they lease 100,000 SF. That is no longer a foregone conclusion. At one time planning to be the sole tenant in the 390,000 SF Binney Street building, Ariad will now occupy 240,000 SF and sublease 150,000 SF to IBM Watson. IBM’s footprint is pure growth and strategically located adjacent to 1 Rogers Street, another sizable site for them in Cambridge.

Despite these developments, Cambridge continues to be a dynamic market, and we do expect opportunities to arise from the various moving pieces there. Some companies have recently received bad data from clinical trials, including Infinity Pharmaceuticals, which is already impacting its space needs. Infinity announced layoffs after AbbVie terminated a partnership that was helping fund the development of Infinity’s drug candidate, duvelisib. One of Infinity’s buildings on Memorial Drive (51,000 SF) has already been placed on the sublease market.

Even with new spaces like Infinity’s building becoming available, demand in Cambridge continues to out-pace supply. With sizable requirements in the market like Johnson & Johnson (200,000 SF), Project Legacy (200,000 SF), Project Crimson (200,000 SF) and Mass Innovation Labs (100,000 SF), among others, we’ll need to see a few more cranes on the Cambridge skyline to begin to accommodate the demand.

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Cresa is the world’s largest tenant-only commercial real estate firm. In representing tenants exclusively — no landlords, no developers — we provide unbiased, conflict-free advice. Our integrated services cover every aspect of a real estate transaction from site selection and financing to project management and relocation services. We offer our clients customized solutions with over 60 offices covering 75 markets worldwide. For more information, visit www.cresa.com.