JLL’s 2015 Life Sciences Outlook report has been released and once again the Greater Boston area has been named #1 life sciences cluster in the U.S. Boston remains the top hub based on employment concentration and growth, levels of funding and number of patents. With the largest concentration of life science researchers in the U.S., Boston has over 3.7 million square feet of requirements.
Despite over three-million square feet of new construction being delivered alone in the Cambridge marketplace, lab vacancy is at an all-time low. Cambridge and core Suburban lab markets have seen approximately 20 percent rent growth year over year and cannot deliver product fast enough. Research results, M&A activity and partnership agreements have forced an immediate need for space.
The lack of Cambridge supply has given the Greater Boston lab-market a chance to mature. Research sub-clusters in our core Suburban markets have exploded seeing approximately 18 percent rent growth since the first quarter. For the first time class-A suburban asking rents are hovering in the low 40’s triple net, with speculative lab development underway adding to the targeted office conversions.
There are over 80 active companies representing 4.8 million square feet of requirements all competing for less than one million square feet of existing product throughout the Greater Boston market. Over 50 percent of the 80 plus active tenant searches are Cambridge based groups considering suburban relocation adding to the list of existing pre-IPO and mid-size growth companies recently making the move to meet timing and take advantage of economics.
On the national level, the Life Sciences Outlook report reveals a rise in the demand for generic brand drugs. With big pharma M&A on the rise, mid-size firms are claiming vacant lab space, capitalizing on central locations and existing infrastructure in hubs around the country. The competitive life science market is forcing firms to enhance innovation and creativity, increasing the need for highly educated employees and pushing the demand for real estate near elite educational institutions, such as around MIT and Harvard in Kendall Square, Cambridge. With the increase of activity and reduction of vacant lab space, landlords are provided with the opportunity to push rents higher.