Qualified Labor, Healthy Tenant Demand Drive Life Sciences Development in Boston
By Brendan Carroll, director of research, Cushman & Wakefield
The rapid emergence of greater Boston in the first two decades of the 21st century as a global center of advanced, technology-assisted biology has been followed by an even faster rate of growth since the start of the new decade.
We have reached a critical mass in the greater Boston market, where we have developed a combination of skills, institutions and collaboration between companies that is supported and financed by an investor base that is qualified to evaluate the potential efficacy of new innovations. This landscape has created a self-propagating ecosystem for development and absorption of life sciences properties.
The region’s large inventory of lab space has also evolved as a driver of new users into the market as biotechnology groups increasingly focus on speed to market for promising scientific breakthroughs. In response to these drivers, the inventory of biotechnology-focused laboratory space in greater Boston, which eclipsed 20 million square feet in 2016, is now on pace to reach 30.7 million square feet by 2023.
Furthermore, the current inventory levels will likely approach and surpass 40 million square feet this decade, as a sizable set of projects are expected to move forward in the coming years.
With an earlier set of locally founded biotechnology companies achieving commercial success and proving the viability of advanced approaches to biological remedies, the capital sources available to future innovators continue to expand.
Additionally, the record $9.8 billion of venture capital raised by Massachusetts-based life sciences companies in 2020 will likely be substantially exceeded in 2021, with $7.9 billion already raised at the mid-year point.
These surges in awarded capital are being rapidly reflected in requirements for space. The market had more than 6 million square feet of active tenant requirements for lab space as of July 2021, compared with 4.2 million square feet of tenant demand in January 2021 and just over 2 million square feet of occupier space in the market two years ago.
With so much tenant demand, biotechnology organizations have attracted desired talent in an expanding number of geographies, with the successful recruitment of desired scientists now proven to be possible in an expanding set of biotechnology industry clusters.
Lab developers, once believed to be heavily limited to the immediate vicinity of Kendall Square in Cambridge, have now responded to a diversifying set of geographical preferences with successful projects in West Cambridge, Watertown and the Seaport District.
We expect these developers to also soon extend this success to clusters in Somerville, Dorchester, Allston and both urban and inner suburban locations in the greater Boston area.