Lab space in Cambridge is white hot with considerable investment coming into the city at an all-time record number. As a result, players in the market have to adjust and are now moving towards co-working lab space to fill whatever inventory is left. Enclosed is new research from Cushman & Wakefield examining the data, all of which supports the notion that
the Cambridge lab market is arguably the epicenter of the life science world. Below is a synopsis of the movement in the market:
Over the last 12 months, the seven-square mile piece of land has seen over $3.6 billion in venture capital assigned to life science firms. Year-to-date 2018 VC investments are on pace to shatter any calendar year in recorded history. There are many firms developing lifesaving drugs and devices, but a life science real estate firm is making possibly the biggest splash the overcrowded lab market has seen in years. Mass Innovation Labs has put a lab spin on the hottest CRE trend in recent memory – co-working. With lab vacancy currently hovering below 1%, the company hopes to provide turnkey space with flexible terms.
The company originally moved into a sublease of Vertex Pharmaceutics back in 2015 of 123,000 SF at 675 West Kendall Street and recently signed three leases across the urban core – 52,000 SF at 21 Erie Street, Mass Ave Corridor; 54,000 SF at 6 Tide Street, Seaport; and 83,700 SF at 40 Guest Street, Brighton. The company takes care of all the administrative hurdles associated with conducting a lab space and allows flexibility of month to month leases of fully turnkey lab benches. This business model has been a hit with office tenants in the form of WeWork, a company that has grown to 800,000 SF in Boston alone. With the entrepreneurial life sciences market very strong, especially in Cambridge – a market that has raised over $3.1 billion in life science funding in the prior four quarters – Mass Innovation Labs is a primetime home for any company looking for lab space.
With vacancy at historical lows, starting rents in the city of Cambridge are pushing north of $88 NNN. Another recent trend is the move from $1 annual rent increases (or even $1.50 increases), to 3% annual bumps. This may not sound like much, but it can make a severe impact on the rent figure when terms are 10 or 12 years long. If you look out to 2026, current signed leases are paying an average of $111 PSF. When taxes and operating expenses are added on to rent, that total climbs to $124 PSF.
