Short on time? Here are the highlights of our first quarter 2018 Cambridge Office & Lab MarketView. To request the full report, fill out the form at the bottom of this post.
250 North Street, Cambridge Crossing
The Cambridge Office market maintained its unquestionable status as the premier office submarket in Greater Boston in Q1 2018. Vacancy fell to 3.8% market-wide, and availability finished at 11.9%. These types of numbers are to be expected, but average asking rents saw a major jump that put them on a new level—even by Cambridge standards. Due in large part to actively marketed new construction bringing an influx of premium space to the market, rents rose from $70.18 per sq. ft. in Q4 2017 to $80.52 per sq. ft. by the end of Q1 2018. In East Cambridge, they reached $93.17 per sq. ft. While landlords in other markets may not be able to command anything near these prices, Cambridge owners don’t have much cause for concern. The city’s tenant mix is increasingly dominated by deep-pocketed life sciences and tech giants who are more than up to the challenge.
Not all the storylines followed the usual path, though. The largest lease of the quarter was significant not only in its size, but because of its location. Philips leased a few blocks of space in rapid succession, totaling over 334,000 sq. ft.—but not in the heart of Kendall Square, as one might expect. Instead, this space was taken at 250 North Street, the first building to break ground at DivcoWest’s 4.5 million sq. ft. Cambridge Crossing development near Lechmere. Like many projects in the Boston area, the area formerly known as North Point had been a development pipe dream for many years. A lease of such magnitude from a blue-chip company is validation that this area’s promise is finally coming to fruition. When complete, Cambridge Crossing will feature 2.1 million sq. ft. of office and lab space, 2.4 million sq. ft. of residential, 100,000 sq. ft. of retail, and 11 acres of open space.
The story of the Cambridge Lab market in the first three months of 2018 should not come as a surprise. The market is as tight as ever, with no signs of changing. Demand remains in the stratosphere, with 2.4 million sq. ft. of active requirements, while only 161,000 sq. ft. are currently vacant. Largely bolstered by new projects under construction, 1.2 million sq. ft. is being marketed for future occupancy—still half the amount of demand. Tenants looking for space in the Cambridge Lab market run the gamut from household names seeking well over 100,000 sq. ft. to homegrown start-ups looking for less than 10,000 sq. ft. For companies large and small, the allure of this market remains unparalleled in the life sciences industry.