According to the latest JLL Global Capital Flows report, despite a 16% decline in overall US volumes over the past year, gateway and larger second tier cities like Boston are continuing to see investment demand in line with last year. In fact, the city ranked as the 10th most traded in the world in the first half of the year with $4.6 billion in total volume, and is home to lab space that can be counted among the most in-demand assets in the U.S.
According to JLL New England Capital Markets Managing Director Frank Petz, “The lab investment market has become a much more accepted asset class in the real estate capital markets these days. The product has migrated from a unique, niche asset to much more of a commodity product that is now attracting institutional capital to it. While it was very few players before, now it’s a much broader group of investors saying ‘I want in.’ ”
One of those investors is Blackstone, who recently acquired BioMed Realty Trust and their lab portfolio for $4.8 billion. According to Petz, “Blackstone buying BioMed is just further validation of the product type. When Blackstone does something people notice, and for them to buy in really says a lot.”
Locally, the Cambridge lab market is experiencing unprecedented low levels of vacancy. In fact, at 0.8%, vacancy is at a low not seen since JLL began tracking the market in 2001. With lab demand far outpacing traditional office, companies like Blackstone are converting office buildings to lab at locations like 50 Hampshire Street.
It’s no wonder demand is so strong as the way the industry feeds off of itself is through an ecosystem. Companies like to be near their competitors which allows them to not only cultivate ideas together but also share personnel which is an interesting phenomenon.