Cambridge turns in another solid quarter… for now


Short on time? Here are the highlights of our first quarter Cambridge Office/Lab MarketView. To request the full report, fill out the form at the bottom of this post.



With the question of the day being whether the market has reached its peak, many have pointed to the fact that Boston rents are still well below their 2008 peak as evidence that there is still room to run. But does Boston proper alone still present the full picture of the market, or has the epicenter of demand shifted to the other side of the Charles?

The rental spike in Boston that preceded the 2008 collapse saw growth of 89.9% from trough to peak. By comparison, East Cambridge office rents have grown 110.1% since 2011. Whether Cambridge is the new bellwether of the Boston market remains to be seen, but signs of caution have already been sighted in the city.

This is not to say the Cambridge Office market is struggling by any definition. Indeed, the first quarter statistics remained robust across the board. Asking rents—already the highest in Greater Boston— continued to see very slight upward growth, absorption was in the black and vacancy was only 3.6%.


In the last few years, finding lab space in Cambridge has been challenging even for those that could afford it. In response, developers and investors have been rapidly putting steel in the air, and more have plans underway to do the same.

At North Point, DivcoWest’s new megaproject near Lechmere, 430,000 sq. ft. of lab space is on the table, while other buildings spearheaded by MIT and Alexandria are already underway to service the pent-up lab demand.

But much like the office side, Cambridge lab demand has been waning of late, leading some to wonder whether these new projects will come online too late in the cycle and only exacerbate a softening market. 


CBRE/New England 2017 Winter BioView: A Look at the Greater Boston Life Science Market


Lowest Vacancy, Highest Ranked: Cambridge Leads the Nation

netherwood-schwesig_evianne_e2By Évianne A. Netherwood-Schwesig, Senior Research Analyst | Creative & Analytics

For anyone familiar with the world of commercial real estate in Boston, it’s well known that Cambridge has been the hottest office market in the last few years. Demand for space, particularly around Kendall Square, has driven rents into the stratosphere and left only small scraps of availability in its wake.

Dramatic descriptions? Maybe not. According to new national rankings by CBRE Research, Cambridge’s metrics aren’t just impressive at a local level. The city boasts the lowest office vacancy rate nationwide, at just 3.8%. This is head and shoulders above runner-up Nashville, which landed at 4.7%. At $65.26 per sq. ft., asking rents in Cambridge were the fifth highest in the country, bested only by a pair each of New York and San Francisco markets. It’s worth mentioning that Boston proper also did itself proud: among all urban markets, its 7.3% vacancy rate and $55.71 per sq. ft. asking rent put it in seventh and eighth place, respectively.


Lowest Office Vacancy Rates:

Rank All Markets Rate (%)
1. Cambridge 3.8
2. Nashville (Suburban) 4.7
3. Oakland (Downtown) 5.1
4. San Francisco, (Downtown) 6.3
5. Manhattan, Midtown South 6.5
6. San Jose (Suburban) 7.2
7. Boston (Downtown) 7.3
8. Walnut Creek/I-680 Corridor 7.8
9. Manhattan, Midtown 7.9
10. San Francisco, (Suburban) 7.9

Source: CBRE Research, Q4 2016

Highest Office Asking Rents:

Rank All Markets Rent
1. Manhattan, Midtown $83.54
2. San Francisco, CBD $72.77
3. Manhattan, Midtown South $71.37
4. San Francisco, (Suburban) $68.28
5. Cambridge $65.26
6. Manhattan, Downtown $59.16
7. San Jose (Suburban) $58.34
8. Boston (Downtown) $55.71
9. Washington, D.C. (Downtown) $53.61
10. Oakland (Downtown) $52.56

Source: CBRE Research, Q4 2016

Still in the Thick of the Cambridge Building Cycle

by Lenny Pierce, Research Analyst

One of the most memorable building surges in the Cambridge market’s history occurred between 1999 and 2002, when it saw over 4.4 million square feet of new development across 27 office and lab projects. This spike in building activity, which was coupled with the later stages of the era, was preceded by 3 years of only 1.2 million square feet of new construction and was followed by period from 2003-2012 that saw only 1.7 million square feet of new construction – allowing us to confidently identify the ’99-‘02 stretch as the definitive peak of the cycle. The 9-year lull that occurred after this peak period was broken in 2013 when Biogen singlehandedly rebooted the market with the preleasing of new 225 Binney Street and 17 Cambridge Center projects for a total of close to 512,000 square feet. These two developments have been followed by 11 more projects, totaling 3.3 million square feet. This recent uptick in building activity in Cambridge is grounds to assume we’ve entered another building cycle. What is less clear is where we are in that cycle. Without a single banner year as the previous cycle had in 2000 – which had 10 building starts  it is harder to say whether we are ramping up, plateauing, or slowing down. However, two key indicators, the scarcity of uncommitted space within the new developments and the demand for space in Cambridge that will need to be met soon, suggest that there is still plenty of building ahead.

New Development

Source: CBRE Research

Of the 4.4 million square feet built during the ’99-’02 cycle, only 60% was precommitted or owner occupied by specific users prior to commencing construction. Examples of buildings being entirely preleased upon groundbreaking during this period included 500 Kendall Street with Genzyme (350,000 SF) and 35 & 40 Landsdowne Street with Millennium Pharmaceuticals (440,000 total SF), but the remaining 1.89 million square feet was entirely available when construction began. In the current building cycle, on the other hand, there is 3.3 million square feet either complete or under construction so far, with a full 3 million square feet or 90% of it precommitted. Cambridge users who have already spoken for this newly constructed space include Ariad Pharmaceuticals taking the entirety of 75-125 Binney Street (388,000 SF) and Sanofi doing the same with 50 Binney Street (258,000 SF). Owner-occupied projects in this cycle have included Novartis’ 550,000 square feet at 181 Massachusetts Avenue and EF Education’s expansion of their campus by 320,000 square feet at Eight Education Way. Projects like these have spelled a current gap between total developed square feet and precommitted square feet that is over 80% smaller than it was in the ’99-‘02 cycle. Much of this discrepancy in precommitment is due to the fact that the number of spec buildings going into the ground in this cycle is down considerably. In the ’99-’02 cycle, 8 buildings totaling 856,000 square feet, including 100 Technology Square (255,000 SF) went into the ground with no preleasing. Our current cycle, on the other hand, has seen only 2 spec buildings going into the ground, 450 Kendall Square (65,000 SF) and 150 Second Street (120,000 SF). 


Source: CBRE Research

The lack of spec building and the 300,000 square feet of available space across these new developments is enough to signal that more shovels will need to hit the dirt, but the current demand in Cambridge bolsters this assertion even further. CBRE/New England considers tenant demand in Cambridge to be how much space the market’s current tenants are looking to expand into combined with how much space prospective new-to-Cambridge tenants are looking for in the area. The current net demand for these 70+ companies totals 2.6 million square feet. The overall availability in Cambridge was 2.6 million at the close of Q1 2015 and with the new uncommitted 300,000 square feet under construction that figure goes to 2.9 million square feet. Since this 2.9 million square feet is made up of small blocks across many buildings, the fact that the availability is technically greater than the demand does not mean much. A handful of big users could find homes in preexisting space, but with 9 different groups looking for over 100,000 square feet each, the market will still need to provide more options. 

Click for larger view

Click for larger view

The answer for growing Cambridge tenants and tenants looking to find a new home in said market will be a willingness among developers to raise that 3.3 million square feet of developed square feet, an initiative that wouldn’t necessarily widen the developed-committed gap for long when considering the abundance of upcoming need. Even though each year so far in this cycle has seen building the 3-4 project range, could we see another 10+ project year like 2000, where close to 2 million square feet of space got under way? 2015 could wind up marking the middle or possibly even the beginning of this building cycle, but all signs point to it falling nowhere near the end.

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Boston: Life Science Hotbed

by Lenny Pierce, Research Analyst


Panel–Bisnow’s Boston Life Sciences Summit

On March 5th at East Cambridge’s Royal Sonesta Hotel, Bisnow hosted the Boston Life Sciences Summit –an event titled “Boston Life Sciences: Global Hotbed?” The discussion featured professionals from the Massachusetts Biotechnology Council (MassBio), The Massachusetts Life Sciences Center and The Boston Globe as part of the event’s keynote interview on the climate of the life science industry as well as a panel of seven speakers focusing specifically on how that climate could affect real estate in the city of Boston in the coming years.



The event lead off with a discussion between The Massachusetts Life Science Center’s Susan Windham-Bannister, MassBio’s Robert Coughlin and The Globe’s Mike Sheehan. Among other issues, these speakers stressed the importance of marketing the Life Science Corridor to incoming life science companies. The Life Science Corridor is a partnership between the mayors of Somerville, Cambridge, Boston, Quincy and Braintree to promote this string of cities along the Red Line as the nation’s Silicon Valley of life sciences. Naturally, the much-needed improvements to the Red Line itself were seen as a crucial step achieving this effect. While the discussion of transit improvements in Boston always leads to questions as to the sources of funding, Coughlin was quick to point out that more life science groups coming to the hub means a larger tax base to pay for T improvements–even if those improvements were made before the companies arrived.

The second half of the summit featured seven panelists who either worked directly in the life science business or for real estate service groups that are intimately involved with said industry. This panel consisted of Karan Paruvangada of AstraZeneca, Bill Kane of BioMed Realty, Thomas Ragno of King Street Properties, Somerville Mayor Joseph Curtatone, Jason Theberge of Commodore Builders, and Erik Lustgarten of Steffian Bradley Architects.

One theme these panelists focused on was the importance of density to the modern life science tenant; the value that biotech and pharma companies place on being physically close to one another. Bill Kane stressed that the life science industry has made a massive shift from one where intellectual property was strictly protected to one where the consistent exchange of information between companies is considered crucial to each entity’s success. This clustering effect doesn’t necessarily need to happen in Kendall Square and Kendall Square alone­–provided an area can get enough companies on board, that vital density can be achieved elsewhere in locations like Lexington and Waltham as well. In fact, the same principal can be achieved inside a single building as has happened with King Street’s 87 and 200 Cambridgepark Drive. 87 Cambridgepark Drive is now home to Dicerna Pharmaceuticals and after major renovations that afforded the property a much more open layout, smaller companies lucky enough to join Dicerna in the property will be able to form something of a micro-hub within the building.

"Joe Curtatone at Assembly station opening, September 2014" by Pi.1415926535 - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons -,_September_2014.JPG#/media/File:Joe_Curtatone_at_Assembly_station_opening,_September_2014.JPG

“Joe Curtatone at Assembly station opening, September 2014” by Pi.1415926535 – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – Link here

The last topic covered was a discussion of where in the Boston area we could see our next stage of development for life science real estate. Mayor Curtaone was naturally quick to make the case for Somerville­–and it’s a strong one. Not only is the city already along the Life Science Corridor, but according to Curtatone, it also has over 300 acres of developable land. Somerville’s proximity to Cambridge also means that the value placed on geographical industry density also strongly favors the city as the next great life science hub.

Sustaining Boston as America’s life science hotbed will require meticulous attention from both the public and private sectors. With similarly strong life science hubs in places like San Diego and San Francisco, Boston’s status as the premier destination for pharmas and biotechs is something we as a city will need to constantly bolster. Just as Lexington and Waltham are perfectly reasonable alternative to Kendall Square for density-seeking groups, so too could Raleigh-Durham and Philadelphia be reasonable alternatives to Boston. Luckily, according to every one of Thursday morning’s speakers, defending our position as the most desirable location for life science companies in the country is a challenge that Boston is more than ready to meet.

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2015 Cambridge Market Outlook


by Adam Brinch, Senior Vice President/Partner, Cambridge Brokerage Team

As usual, last year’s Cambridge statistics were a bit of a mixed bag with absorption being adversely affected by the big defections of CDM and Sonos, and vacancy staying relatively flat, hovering in the 6-7% range for both the office and lab markets.

However the two data points that kept commercial real estate investors happy this past year, asking rents and tenant demand, experienced staggering advances:

  • Office rents were up 35% and tenant demand was up 119% year-over-year
  • Lab rents were up slightly and tenant demand was up 108% year-over-year


To give some perspective, over the past 15 or so years since the early 2000 tech bubble began to rebuild itself, tenants and buildings fit nicely into one of four categories. On the office side, there were office tenants, meaning either a technology titan or new economy start up or service provider in the market to lease traditional space, or one of an existing inventory of office buildings in close proximity to MIT or Harvard or the T. On the lab side, there were lab tenants, meaning a major pharmaceutical company, or a young biotech, which was attracted to, and dependent on the market’s mature inventory of lab buildings–physically robust buildings with appropriate HVAC and MEP systems to support wet chemistry, biology and animal care experimentation.

In fact, the Cambridge market’s delineation of this sort of inventory and expertise in this type of real estate is one of the major reasons that both the high tech and life sciences industries have been so successful. Reflecting on the past year, and what the true market catalyst over the past 12 months was, the single theme that we kept coming back to was the border that began to blur between the historically rigid definitions of “lab” and “office”–bringing you the “la-BOFFICE”. We define it as a hybrid real estate deal where a lab tenant’s headcount growth, in departments ranging from regulatory to safety, HR to sales to data management­, all require strictly office space.

During the course of 2014, something really unique began to take shape as tenants and landlords began to ignore the way buildings were defined, and instead focused on the right real estate to support their businesses. What this broadly meant is lab landlords did office deals in their lab buildings and office landlords benefitted from lab tenants needing immediate growth space in their office buildings. Looking at the “la-BOFFICE” deals that have happened over the past year, some of the best-known pharmaceutical and hottest biotech companies transacted. The irony is that all of these were strictly office deals. Pfizer, Novartis, Biogen, Sanofi, Baxter, Infinity, Sarepta and others accounted for an astounding 550,000 RSF in transactional volume. In years past, most if not all of these companies would have grown proportionally in their need for both office and lab space. The blending together of these two types of real estate set off a chain reaction that rippled through all other aspects of the way the market acts and reacts.

With a majority of office growth coming from the life science industry, “la-BOFFICE” deals happening in both office building and lab buildings are putting upward pressure on rents in both types of buildings, while reducing available options for early and mid stage biotech tenants that need a traditional mix of lab and office space, but whose physical needs require them to be in a lab building. The scarcity and rising rents are causing landlords to re-think their tenancy strategy.

So the final chapter in our story begins to lay the groundwork for the year ahead, with fundamentals favoring office deals over lab and a few lingering thoughts on what sorts of buildings landlords with development projects in the pipeline will decide to build. Will it be pure office or lab-capable buildings with systems that can be upsized if the pendulum swings down the line? With Alexandria, MIT, HYM, and others controlling more than 5 million SF of development pipeline in East Cambridge, we will find out in the near future.

Office landlords are certainly looking forward to 2015, as tenant demand shows no sign of slowing down with 14 active requirements larger than 100,000 SF and a historical high of 4.5 million RSF of combined office and lab demand.

Greater Boston as a whole, and especially Cambridge, is still undervalued compared to other U.S. and global markets when you look at the absolute value of our intellectual capital, our educational network, our healthcare system and our dynamic cluster of new economy tenants.

The only problem, as my partner Greg Lucas is fond of saying with a smile, is “you can’t build dirt.” As tenants from around the globe pour into the market with an emphasis on being in Cambridge and homegrown companies continue their organic growth, the remaining vacancy will quickly be absorbed. The market is in desperate need of a relief valve, and rents will continue to climb. With the InterSystems and Microsoft leases rolling at One Mem, historical top tier office rents will undoubtedly be eclipsed.

For all these reasons, 2015 will be another happy year for landlords. For tenants, with mid-$40s rents, single digit availability and the now necessary live/work/play environment, Alewife is becoming as competitive as the other Cambridge submarkets and a severe lack of availability and rising rents could cause tenants to overstep the borders of the Cambridge city limits and consider suburban alternatives.

To view CBRE/New England’s 2015 Real Estate Outlook click here.

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The Cranes Have Returned – Cambridge BTS Activity


by Suzanne Duca, Director of Research
With more than 2.2 million square feet of office space currently under construction, over 800,000 square feet scheduled to break ground in 2014, and an additional 4.6 million square feet expected to break ground in the next 2-3 years, cranes have returned to change the Cambridge landscape.

  • Organic growth from local companies like Biogen Idec, Broad Institute, Millennium: The Takeda Oncology Company and ARIAD Pharmaceuticals are fueling build-to-suit demand
  • Space utilization trends combined with lack of big block inventory in East Cambridge are forcing tenants to continue to consider build-to-suit options
  • The desire for geographic continuity is outweighing ‘above-market’ rents associated with new construction
  • There has been an industry-wide shift to lower lab/office ratios, causing base building infrastructure to be carefully considered


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