By Bob Richards, Executive Vice Chair, Brokerage
Biotech real estate is booming in Massachusetts and shows no signs of slowing down any time soon. Our 2019 BioSTATus trends report shares updates on demand drivers for life science space, how companies are adapting to this supply-constrained market in the short term and signals of optimism that conditions will improve.
According to the Massachusetts Biotechnology Council, employment at life science manufacturing companies has increased by 6% (to just over 10,000) in the past decade – compared to just 1% growth nationally during the same time period. While Kendall Square is the hub of Boston’s life science sector, there are notable manufacturing mini-clusters emerging throughout the region. In the outer suburbs, especially along I-495, pharmaceutical manufacturing has been driving demand for life science space. Some of the region’s largest facilities include Pfizer’s manufacturing facility in Andover and Sanofi’s new digitally enabled facility in Framingham. While biotech manufacturing facilities do not typically house large work forces, their physical requirements are driving demand for space.
As companies progress through the drug development cycle, they can quickly become space constrained. With very limited vacancy in Cambridge, there are very few opportunities for companies to expand. These tight conditions have forced biotech companies to become more creative with space planning or consider directing growth outside of Cambridge. Kymera Therapeutics recently confronted this challenge. Headquartered in Kendall Square in an incubator, they anticipated needing additional space within the next year since they were growing so rapidly. This meant expanding their footprint to 35,000 square feet – in space located outside of Cambridge – in Watertown.
This westward migration from Cambridge to Watertown is a trend that Duncan Gratton, Executive Director, has been witnessing since 2017. Duncan notes that there has been a significant uptick in biotech companies moving into Watertown, with at least five new life-science companies – including Selecta Biosciences, Platelet Biosciences, Kymera Therapeutics, Arkuda Therapeutics and SQZ Biotech – leasing space in Watertown this year, spanning more than 150,000 square feet combined.
As of the end of the third quarter, Kendall Square’s lab vacancy rate was below 1.0%. Developers and investors have been working hard develop product to meet the demand and there are a significant number of projects that are expected to be completed in the next two to three years. In total, we are forecasting 3.8M SF of lab space to be delivered in Greater Boston by 2023.
Whether they’re sticking with Kendall or not, there is a lot to be said about Boston’s biotech growth and where it might be headed next. For more data and statistics on this biotech boom, download our BioSTATus trend report: