By Aaron Jodka | JULY 2018
The Cambridge lab market is about as tight as it has ever been. Vacancies are 2.5% at the end of the second quarter, sublease space is all but gone, and rents have never been higher. Vacancies have generally been in the low single digits since the end of 2015, a dynamic that has put pressure on tenants and in turn, fueled the growth of the suburban lab market. Since 2016, tenants have migrated to 1.7 million SF of space or have expanded to the suburbs from Cambridge. Tenants such as Alnylam, Moderna, C4, Wave, Visterra, and Addgene have all gone in this direction, while others are actively seeking an additional 300,000 SF in the suburban market, and more tenant requirements are on the way. That said, it hasn’t been a one-way street, as tenants moving to Cambridge have leased more than 350,000 SF.
The main beneficiaries of this trend have been the markets one would expect—Lexington, Waltham, Watertown, and Woburn. But Somerville, Bedford, Norton, and Norwood have also all gained new tenants; of this total tenant migration, more than half has been to fill biomanufacturing requirements. Greater Boston’s highly educated workforce and unique skill sets provide the talent needed to run strategic manufacturing operations. As firms come out of stealth mode, go through trials, and have approved products, they want to control the process from R&D to production. In another development, Rubius has announced plans to build a manufacturing facility in Rhode Island.
This trend of suburban expansion isn’t going anywhere and will continue to drive the lab market. And this says nothing about tenants from out-of-market, which are expected to be yet another source of demand.
In fact, the suburban lab market is nearly as large as that in Cambridge, and more suburban development is on the way. This growth has further established the suburbs as real competitors to Cambridge and made them important forces in the market. The demand for lab space won’t change. Which is why top life science investors are buying and building new product to meet this ever-growing need.