Cambridge Lease Signifies Owner's Market

"It's just a pure supply/demand dynamic," says Insignia/ESG broker Daryll Morse. "You've got companies that need to be in Cambridge, and they are willing to pay more to be there."

According to sources, Atlanta-based iXL is in late-stage negotiations to take nearly all of Building 300 at Technology Square. Now under construction, the 175,000-sf building is one of four that owner Beacon Capital Partners is planning to develop at the park, acquired by the company in 1998 for $123 million.

"That's the buzz on the street," says one broker familiar with the iXL deal. The source agrees that companies would normally exact a discount out of such a large lease, but says Cambridge owners are simply in too strong a position for that to occur. Because his company is exclusive leasing agent at Technology Square, Morse declined comment on the iXL lease, but he does acknowledge that there is at least one 100,000-sf deal in the market that will command "north of" $60 per sf. "That really is right on the mark," says Morse. "You can throw out the window anything that's happened before."

If consummated, the iXL deal would demonstrate the dramatic rent escalation that has taken place in Cambridge during 2000. Morse says Insignia/ESG's own figures had average rents between $35 and $45 per sf at the beginning of the year, but adds that has since bumped up to the $50 to $60 per sf range. The Cambridge market has a vacancy rate under 2%

Calls to Beacon and iXL were not returned by press deadline.