Cambridge Office Market is a Playground for the Elite

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Article courtesy of Cresa Boston

With the market conditions we’ve seen in Kendall Square in recent years, office rents have reached a level where only an elite segment of the potential tenant pool can afford and justify that location. So it wasn’t surprising that when 30,000 SF became available at 101 Main Street, Amazon stepped up and leased it, bringing the company’s total footprint in the building to 150,000 SF.

Despite the low vacancy and “elites only” price point, however, there is some space available in Kendall Square. And because most tenants aren’t willing to pay $80/SF, that available space doesn’t necessarily lease quickly. The market is getting some help these days from nearby lab tenants. Sage Therapeutics, an early-stage but fast-growing company based at 215 First Street, leased 20,000 SF of office space next door at 245 First Street and is now in the market for even more. Furthermore, the ownership of 50 Hampshire Street is in the process of converting several vacant floors to lab space to accommodate demand in a market with availability close to zero.

While the nearby Lechmere submarket offers a discount relative to Kendall, even there rents have risen substantially over the last few years — now well into the $70’s/SF for Class A space. Two notable leases signed in Lechmere in the first half of 2016 were Flagship Ventures for 20,000 SF and CarGurus for 30,000 SF, both at 55 Cambridge Parkway. Flagship relocated from 1 Memorial Drive and CarGurus expanded out of nearby 2 Canal Park, and both deals at the Cambridge Parkway location helped backfill a good portion of the former Genzyme space that was vacated last year.

Meanwhile, the migration of office tenants out of Cambridge continues, as users nearing the end of a lease whose terms were negotiated years earlier realize they can relocate to less expensive submarkets with similar access to public transportation and amenities. As this trend continues, we expect much of the vacated Cambridge space to be backfilled by either established technology companies like Amazon and Google, or by the seemingly unending demand in the life science market.

Read the full market report.

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.