RESEARCH 4Q 2019

BOSTON
LIFE SCIENCE MARKET
BOSTON AND THE SUBURBS CURRENT CONDITIONS
BENEFIT FROM CAMBRIDGE’S Full occupancy and high commitment rates in new construction in
ZERO VACANCY Cambridge are driving activity to other submarkets.

The region’s life science sector remains in high-growth mode, with Greater Boston posted more than 1.0 million square feet of net absorption
metro Boston seeing an 8.0% year-over-year increase in biotech for the second straight year. Vacancy dropped to a new low of 5.0%.
industry employment through the third quarter of 2019, according to
Boston and suburban construction are on the rise as developers look to
labor market data provider JobsEQ. These gains resulted in a second
capitalize on robust demand and severe constraints in Cambridge.
straight year of more than 1.0 million square feet of laboratory net
absorption that has enabled vacancy to end 2019 at 5.0%, a new low
for the Greater Boston life science market. With Cambridge seeing full MARKET ANALYSIS
occupancy over most of the past five years, more companies are being
forced to consider fringe and suburban locations. Markets outside of Cambridge Lab Asking Rent (NNN) and Vacancy
Cambridge accounted for more than 70.0% of annual net absorption,
$100 20%
but expect the pendulum to shift back to Cambridge as several new
projects reach completion and more enter the pipeline. $80
15%
$60
CAMBRIDGE 10%
The landscape in Cambridge continues to highly favor landlords as $40
tenants compete fiercely for space in a market that’s experienced low 5%
$20
single-digit vacancy for a fourth straight year. Vacancy rates averaged
$0 0%
below 2.0% in 2019 and on a direct basis, stood below 1.0% to close
4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19
out the year. Many availabilities are still never officially hitting the
Average Asking Rent (Price/SF) Vacancy (%)
leasing market, a trend that became more prevalent this year. At
Technology Square, Moderna reconfigured its footprint after leasing Cambridge Lab Net Absorption (SF, Thousands)
47,200 square feet of former Novartis space, while Foghorn
Therapeutics signed a new 81,400-square-foot lease to take over 1,200
space that was mostly occupied by Moderna and Codiak Biosciences, 900
with the latter moving to 35 CambridgePark Drive this quarter. Other 600
recent notable activity included Scholar Rock and Affinivax each
300
committing to nearly 50,000 square feet at 301 Binney Street, space
that was formerly occupied by Ironwood Pharmaceuticals. 0
-300
The new building at 238 Main Street in Kendall Square is close to 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19

signing a lease for its two remaining floors, and with the exception of
The Bulfinch Co.’s one remaining floor in Alewife, there is no new
MARKET SUMMARY – CAMBRIDGE LAB
laboratory construction available for occupancy through 2021. Existing Current Prior Year Ago 12 Month
Quarter Quarter Period Forecast
availabilities are still scarce, with just three direct spaces above 20,000
Total Inventory 11.3 MSF 11.3 MSF 10.8 MSF 
square feet available. In response to these tight supply conditions,
several large projects are advancing through the development and Vacancy Rate 1.6% 2.6% 0.6% 
planning processes. The new Volpe Transportation Center broke Quarterly Net Absorption 110,867 SF -62,691 SF 339,014 SF 
ground and once completed, MIT will begin construction on 1.7 million
Average Asking Rent $74.97 $84.48 $72.47 
square feet of office and lab space. New England Development is
nearing approval to redevelop the CambridgeSide Galleria mall, which Under Construction 1.9 MSF 1.9 MSF 1.8 MSF 
is expected to include 400,000 square feet of office and lab space. Deliveries 0 0 0 

© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 1

4Q 2019 BOSTON LIFE SCIENCE MARKET

Other projects in Kendall Square that are likely to break ground in the
next 12-24 months include BioMed Realty’s site at 585 Third Street and
Alexandria’s site at 325 Binney Street. With East Cambridge lab
vacancy close to zero since late 2018, developers will move
expeditiously to capture pent-up tenant demand. Rent growth
continues to reflect the disparity between supply and demand. Asking
rents at Cambridge Crossing are above $100/SF NNN, while BioMed
Realty recently signed two leases at starting rents north of $125/SF.
BOSTON AND SUBURBS
The biotech industry’s outsized growth across the metro and persistent
lack of space in Cambridge fueled record net absorption of nearly
900,000 square feet in Boston and the suburban submarkets in 2019.
These gains pushed vacancy rates along Route 128 to a near decade
low of 8.6%. Vacancy in Boston and the Inner Suburbs also ended the
year in the single digits at 5.3% and 8.9%, respectively. Boston’s
Seaport captured the largest laboratory lease this quarter when Vertex
Pharmaceuticals inked a deal for all of iSQ Seaport’s second phase
spanning 250,000 square feet. Tenants being squeezed out of
Cambridge remained a major driver of activity, especially within new
construction. 828 Winter Street secured a second tenant with Biotech
Pharma leasing 26,200 square feet. LogicBio Therapeutics signed for
23,900 square feet at 65 Hayden Avenue, which is now fully leased.
The construction pipeline outside Cambridge is poised to grow
considerably in the next decade. Related Beal revealed plans for its site
in the Seaport, where Breakthrough Properties will also begin work on
105 West First Street. More development is also set for Arsenal Yards.
CAPITAL MARKETS
Strong leasing market fundamentals and wide expectations that the
Boston metro will remain a hotbed of the biotechnology industry
continued to spur more laboratory investment as 2019 drew to a close.
Prominent life science property investors Alexandria Real Estate
Equities (Alexandria) and BioMed Realty have amassed portfolios in
recent years that now control more than 85.0% of the East Cambridge
market, so it’s of little surprise that other submarkets are seeing
heightened investment activity. After the acquisition of several
properties in the Seaport earlier in the year, Alexandria is lending
support to another emerging life sciences cluster, Watertown, where it
recently closed on Arsenal on the Charles for $525.5 million.
Athenahealth, the seller, agreed to leaseback roughly half of the
835,000-square-foot asset for 15 years, while the other half will
undergo renovation and lab upgrades. In other activity, The Davis
Companies closed on its sale of 35 CambridgePark Drive to Healthpeak
Properties for a new high watermark in West Cambridge.
LOOKING FORWARD
The life science sector will remain a major driver of the local economy
and spur more commercial development, as evidenced by the swelling
construction pipeline. However, recent IPO and venture capital figures
suggest that 2020 could see recent record levels of funding and
expansion moderate further. Investors have grown more selective
amidst the recent drop off in company flotations and valuations, with
the upcoming presidential election adding some uncertainty that could
also weigh on decision making.

DIRECT AVAILABILITY RATES – CAMBRIDGE LAB ASKING RENT BY CLASS – CAMBRIDGE LAB
Availability Rates by Class Average Asking Rent ($/SF NNN)
25% $100

20% $80

15% $60

10% $40

5% $20

0% $0
4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19
Class A Class B Class A Class B

GREATER BOSTON LAB – SELECT LEASE TRANSACTIONS

Tenant Building Submarket Type Square Feet

Vertex Pharmaceuticals iSQ Seaport - Phase II, Boston Boston - Seaport Direct 250,000

Foghorn Therapeutics 500 Technology Square, Cambridge East Cambridge Direct 81,400

Scholar Rock 301 Binney Street, Cambridge East Cambridge Direct 51,400

Thrive Earlier Detection 222 Jacobs Street, Cambridge East Cambridge Sublease 48,800

Affinivax 301 Binney Street, Cambridge East Cambridge Direct 47,700

LogicBio Therapeutics 65 Hayden Avenue, Lexington West - Route 128 Direct 23,900
© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 2
4Q 2019 BOSTON LIFE SCIENCE MARKET

LABORATORY SUBMARKET STATISTICS

Total Under Total Qtr YTD Class A NNN Class B NNN Total NNN
Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF)

East Cambridge 7,343,400 1,670,800 0.6% -4,884 148,650 *$98.00 *$87.00 -

Mid Cambridge 2,936,620 0 0.1% 8,393 8,302 $83.29 $82.45 $82.64

West Cambridge 999,675 270,000 13.4% 107,358 198,361 *$80.00 $68.79 $68.79

Cambridge Total 11,279,695 1,940,800 1.6% 110,867 355,313 $83.29 $74.03 $74.97

Boston - Seaport 1,105,562 250,000 9.7% 12,044 130,505 *$85.00 $67.73 $67.73

Boston - Fenway/LMA 1,404,946 0 1.9% 0 16,600 *$85.00 *$75.00 -

Inner Suburbs / Urban Edge 1,704,284 325,090 8.9% 27,979 114,953 $68.00 $42.00 $62.84

North - Route 128 1,359,807 0 4.1% -20,025 -17,754 $28.00 $22.40 $22.48

West - Route 128 3,229,825 433,890 11.6% 273,321 648,544 $50.69 $45.00 $49.86

Route 128 Total** 5,016,477 433,890 8.6% 253,296 630,790 $50.58 $29.93 $43.57

Route 495 948,251 0 18.5% -243 -243 - $22.27 $22.27

Market Total 21,459,215 2,949,780 5.0% 403,943 1,247,918 $55.13 $46.43 $50.53

* No direct space available for lease within these submarkets. These figures represent the highest achievable rents in these submarkets assuming direct availability, and are not factored into
the submarket and market average calculations.
** Route 128 Total statistics include several laboratory buildings located in the South - Route 128 market.

CAMBRIDGE LABORATORY STATISTICS - CLASS A

Total Qtr YTD Class A NNN
Total Inventory Under Construction
Vacancy Absorption Absorption Asking Rent
(SF) (SF)
Rate (SF) (SF) (Price/SF)

East Cambridge 6,124,560 1,670,800 0.6% 0 139,634 $98.00

Mid Cambridge 2,136,818 0 0.0% 0 759 $83.29

West Cambridge 635,852 270,000 4.9% 110,130 188,324 $80.00

CAMBRIDGE LABORATORY STATISTICS - CLASS B

Total Qtr YTD Class B NNN
Total Inventory Under Construction
Vacancy Absorption Absorption Asking Rent
(SF) (SF)
Rate (SF) (SF) (Price/SF)

East Cambridge 1,218,840 0 0.4% -4,884 9,016 $87.00

Mid Cambridge 799,802 0 0.3% 8,393 7,543 $82.45

West Cambridge 363,823 0 28.4% -2,772 10,037 $68.79

© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 3

4Q 2019 BOSTON LIFE SCIENCE MARKET

LIZ BERTHELETTE JONATHAN SULLIVAN MICHAEL MALINCONICO

Research Director Research Manager Senior Research Analyst
617.863.8377 617.863.8421 617.863.8428
elizabeth.berthelette@ngkf.com jonathan.sullivan@ngkf.com michael.malinconico@ngkf.com

Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in
historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are available at www.ngkf.com/research

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© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 4