Q1-2018-BiotechReport

WEST CAMBRIDGE LAB

TOTAL INVENTORY (SF)

TOTAL VACANT (SF)

TOTAL VACANCY RATE

Q1 NET ABSORPTION (SF)

YTD NET ABSORPTION (SF)

West Cambridge

787,860

72,632

9.2%

-

-

100 150

50%

TRENDS • With little leasing or absorption taking place during the first quarter, vacancies remained unchanged, at 9.2%, in the West Cambridge lab market. Much of Cambridge’s available lab space is located here, with more than 70,000 square feet of space currently vacant. The delivery of the 227,000-square-foot 35 Cambridgepark Drive will add another large block of space to the available inventory here. With that said, fundamentals remain ultra-tight in both East and Mid Cambridge, and West Cambridge remains a key relief valve for these more established life science hubs. Look for continued movement into the market as space constraints and historically-high rents push tenants out of Cambridge’s core lab markets. • Celgene continues to expand its presence in the West Cambridge Submarket. Most recently, the biopharmaceutical company leased another 20,000 square feet at 200 Cambridgepark Drive — bringing the firm’s occupancy to roughly 127,000 square feet (more than half of the building). Celgene has also been on a shopping spree recently. Earlier this year the firm acquired Waltham-based Juno Therapeutics for $9 billion, which followed the acquisition of Impact Biomedicines for several billion dollars. out from Core Kendall Square and into this market. As a result, landlords have been able to push through stronger rent gains over the past few years, with lease rates rising by 31% since the end of 2014. Despite this growth, rates for space in West Cambridge offer a steep discount compared to neighboring submarkets. Existing lab space boasts a mid-to-high-$50s/SF price tag, while asking rents are in the high $60s/SF at 35 Cambridgepark Drive, which is not included in the current stats. While peak growth is likely behind us, look for modest gains in the near future. • While venture capital has been comparatively less active in West Cambridge, a handful of funding events took place over the last several months. Most recently, Cytier Therapeutics raised $29 million in a Series B round, and Ultivue also closed a Series B round; raising $20 million. Late last year, Aura Biosciences raised another $30 million while LifeMine Therapeutics closed a $55 million Series A round. • The majority of Cambridge’s construction remains concentrated in East Cambridge, but West Cambridge could see some more action in the future. The Bulfinch Companies is planning to build out the remaining parcel at the Cambridge Discovery Park. The campus can accommodate up to two additional office/lab buildings totaling 250,000 square feet. • Rents continue to climb in the West Cambridge lab market. As lab space has become scarce throughout Cambridge, tenants have been willing to move further

VACANCY AND NET ABSORPTION

40%

100 150 -300 -250 -200 -150 -100 -50 0 50

50%

30%

40%

-300 -250 -200 -150 -100 -50 0 50

20%

30%

SF (000s)

10%

20%

0%

SF (000s)

10%

-10%

2013

2014

2015

2016

2017

2018

0%

Net Absorption

Vacancy

-10%

2013

2014

2015

2016

2017

2018

Net Absorption

Vacancy

ASKING RENTS Asking Rents

$60

31% Increase

Asking Rents

$50

$60

$40

31% Increase

$50

$30

$40

$20

$30

$10

$20

$0

2014

2015

2016

2017

$10

CONTIGUOUS BLOCKS Contiguous Blocks

$0

2014

2015

2016

2017

1

1

1

2

0K SF

10K SF

20K SF

30K SF

40K SF

on taking place during the first quarter, vacancies remained unchanged, at 9.2%, in theWest Cambridge lab market. Much of ce is located here, with more than 70,000 square feet of space currently vacant. The delivery of the 227,000-square-foot 35 ther large block of space to the available inventory here. With that said, fundamentals remain ultra-tight in both East and mbridge remains a key relief valve for these more established life science hubs. Look for continued movement into the

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