Innovation Growth Drives Space Demand

SAN DIEGO—Sustained leasing demand for high-quality research environments is driving rent growth across all of BioMed Realty's key markets, a trend chairman, CEO and president Alan Gold expects to continue through 2015. The firm reports strong gross leasing during Q1 of 780,800 square feet during the quarter throughout its portfolio.

Jim Cullinan, VP, marketing with BioMed, tells GlobeSt.com, “BioMed Realty creates laboratory and office space for the life science industry in core innovation districts at the intersection of innovation and the growing healthcare sector. We believe the life science and innovation industries are primed to grow in core markets like Cambridge, the Bay Area, San Diego and Seattle as well as emerging markets like Philadelphia, New Haven, North Carolina and St. Louis. We do believe new markets will emerge as cities and states seek to create innovation districts to drive economic growth and create jobs, but for these new locations to be successful, they must be anchored by top-tier research institutions that attract researchers, as well as create environments will a full range of amenities that will draw and keep top talent.”

The quarter's leasing activity included nearly 700,000 square feet of new leases as tenant relationships were formed or expanded with Biogen at 301 Binney St. in Cambridge, MA; Penn Presbyterian Medical Center at 3737 Market St. in Philadelphia; Stanford Health Care and Advanced Cell Diagnostics at the Pacific Research Center campus in the San Francisco Bay area; Akamai Technologies and Reed Elsevier at 50 Hampshire St. in Cambridge; and Juno Therapeutics at 27^th Place in the Seattle market. The company also grew its footprint in the South Lake Union submarket with the acquisition of the 307 Westlake Ave. North building for approximately $90 million. The property comprises 116,200 square feet of lab and office space that is 99% leased to four tenants, including approximately 84,800 square feet of Seattle Biomedical Research Institute. Located in close proximity to the BioMed Realty Research Center, which includes an existing 101,000-square-foot building and a 123,000-square-foot building under construction, the company owns nearly 500,000 square feet of life-science research space in the core innovation districts of downtown Seattle.

As GlobeSt.com reported in March, BioMed recaptured roughly 313,000 square feet of space in Cambridge, MA—described as the most dynamic and valuable life-sciences real estate market in the world—as a result of Vertex Pharmaceuticals terminating its leases on three properties in this market. As a result of the lease terminations, BioMed receives a $14-million termination fee from Vertex and will reposition the properties to meet the growing demand for lab space from new life-sciences companies in this core innovation district.

According to Gold, “As demonstrated by our strong first-quarter results, the pace of innovation continues to drive demand for high-quality research environments in the core innovation districts where our deep and experienced team continues to execute and where we are well-positioned to grow with our valued tenant partners. Sustained leasing demand is driving rent growth across all of our key markets, and we believe that this trend will continue through 2015.”