GlobeSt.com EXCLUSIVE: Biotech Booms in Bay State

Lab space in the Boston market, which also includes Cambridge and the suburbs, stands at 12.13 million sf with 6.6 million sf in Cambridge, and 2.39 million sf in Boston with the remaining 3.1 million sf divided up among the suburbs. Of that total space, only 14.2% is available. "We've seen not only a steady demand for bio-focused real estate, but a proliferation of different settings," Brendan Carroll, an analyst with the locally based advisory firm, tells GlobeSt.com.

Leading the way was the Cambridge submarket, which experienced 223,000 sf of positive absorption in the last two quarters ending March 31. Carroll says the city's reputation as a leading educational center helped drive vacancy rates down by 3.3% to 17.1% as biotech firms continue to pursue space near Cambridge's research epicenter.

Driven by hospitals and large institutional users, Boston saw vacancy rates drop from 1.7% to a nearly non-existent 0.1% in the last two quarters with positive absorption of 39,000 sf. The state's suburban lab market fared well during the last two quarters as well as maturing firms looked to the suburbs for more research space. According to the study, Boston's suburbs had 67,000 sf of positive absorption during that period which lowered vacancy rates for lab space by 2.1% to 18.9%.

In 2004, the state's biotech firms attracted 17.8% of all US biotech venture capital investments, although the figure was about 3% lower than the 20.9 share of venture capital coming to the Bay State in 2003. Developers also are high on the state's reputation as a leader in the biotech field. Builders have 705,000 sf of lab space in the pipeline for the Boston market, but unlike the last two years, when most of that space was speculative, almost all of that construction is now preleased.

"We're definitely seeing a conservative stance from a developer's standpoint," Carroll says. Another thing that bodes well for biotech in the Bay State is the acquisition last month by BioMed Realty Trust, Inc. of seven life science properties from the Lyme Timber Co., an affiliate of Lyme Properties, Carroll notes. "The transaction between these two titans is really a validation on the highest level of the belief that biotechnology investments in Boston are strong."