Avison Young: Demand Strong for Boston Area Lab Space

BOSTON—Brokerage firm Avison Young says that the greater Boston laboratory market hit a significant milestone in the fourth quarter of 2014, reaching a record occupancy level of 14.7 million square feet.

The greater Boston lab market, which totals 16.5 million square feet, ended 2014 with a vacancy rate of 11%. Avison Young states in its fourth quarter lab market report for Greater Boston that demand remains strong in Cambridge and the suburbs. The brokerage firm notes that Route 128 and 495 beltways have zero vacancy in their supply of 2.1 million square feet of lab space. Asking rate increases, particularly for better-quality properties, are resulting in higher achieved rents.

In Cambridge, tenants increased space usage by 44,000 square feet as three consecutive quarters of positive absorption have yielded 204,000 square feet of increased occupancy. The Cambridge lab vacancy fell to 15.4% in the fourth quarter from 16% in the third quarter. Approximately half of the region's lab inventory is housed in Cambridge. Outside of Cambridge, supply continues to exhibit low vacancy rates and stable asking rents, Avison Young states.

'“While Cambridge is the nucleus of the region's biotech industry, the inner suburbs—a submarket known as the 'Ring'—and the Route 128 and Interstate 495 beltways offer additional space availability and price point alternatives, particularly for less expensive options,” says Brendan Carroll, vice president, research at Avison Young's Boston office.

“The biotechnology sector in Greater Boston remains highly dynamic with rapidly evolving requirements based on corporate performance and competitive factors,” adds Michael Smith, Avison Young principal and managing director of the firm's Boston office.