Office Market Overview
At just over 500,000 SF YTD, office absorption was solid. With vacancy under 4% both in East Cambridge and the Mass Avenue Corridor, we anticipate leasing activity to migrate away from Cambridge’s core in the coming months.
While vacancy in Alewife/West Cambridge is just over 10%, rents have increased 14.1% in the last 12 months (to $43.83 PSF – still a steep discount to East Cambridge’s $63.85 PSF). With the exception of 135,000 SF at 35 Cambridgepark Drive, there are no blocks of space available over 50,000 SF in Cambridge.
Laboratory Market Overview
Last quarter’s big news was that BioMed took back the remainder of Vertex’s space at 21 Erie Street, 130 Waverly Street, and 200 Sidney Street. This quarter, the story was the flurry of activity at 200 Sidney Street. Large new tenants include RaNa Therapeutics (28,000 SF)and CRISPR Therapeutics (20,000 SF).
At 362,271 SF, year-to-date absorption can be largely attributed to the aforementioned deals in the Mass Ave corridor as well as Alnylam Pharmaceuticals’ second quarter commitment to 295,000 SF at 675 West Kendall Street.
Alnylam’s deal to backfill Vertex’s space commences in May 2018. In the interim, the space is occupied by Mass Innovation Labs (which inked a deal in the first quarter) as well as Genzyme and Momenta.
Despite our location in the real estate cycle, Cambridge is insulated from significant market fluctuations since its tenant composition is mostly large, strong credit companies. As a testament to continued strong demand, some recent renewals have been executed north of $90 PSF.
With no immediate speculative building deliveries appearing on the horizon, Cambridge’s confining conditions mean that larger tenants may have to consider options to the north and to the west. LINX, a 185,000 SF speculative development in Watertown, broke ground earlier this summer and we expect it to attract tenants displaced from Cambridge.
Click here to download a PDF of Cushman & Wakefield’s Cambridge Office and Lab Snapshot for Q3 2015.