Market for Biotech Space Tightens

Cambridge, the core of the area's biotech market, had a vacancy rate of 15.9% while the suburbs listed an 18.5% vacancy. In early 2004, vacancy rates were nearing 20% for the overall market, with more than 20% vacancy in Cambridge and just over 2.5% in Boston at the beginning of last year.

"All of the primary indicators show a very strong market which we expect will continue for the coming year," Brendan Carroll, director of research for Richards Barry, tells GlobeSt.com But he cautions that the decline is also indicative of a possible crisis as large lab space becomes increasingly rare.

"There's been a tightening in the market for larger blocks of space" over 50,000 sf, he says, noting that a lag in development of larger lab space could pose problems for larger firms looking to enter the region's biotech market. Lab space currently under development, such as Waltham's Reservoir Woods and Hayden Woods in Lexington, is being scooped up by large users before it can come to market. Even in Boston and Cambridge, where demand is exceptionally strong, there are few options for users of more than 50,000 sf while space for tenants that need 100,000 sf or more is almost non existent, he points out.

New construction is hardly outpacing demand. One of the largest new projects, the 705,000-sf Life Sciences Center Boston, which broke ground earlier this year, is already nearly 50% leased to New England Deaconess Hospital and 670 Albany St., a 161,000-sf project being developed in part by Boston University, has only 42,000 sf available for lease.

Smaller users, however, have more options but a lack of venture funding for start up biotech firms has kept smaller spaces vacant throughout most of the region. "You can almost consider the vacancies in the biotech market to be like Swiss cheese," notes Carroll. But even that smaller space may soon be filling. According to RBJP's study, there are currently 22 organizations shopping for at least 10,000 sf of lab space marketwide.