Yesterday NAIOP Massachusetts hosted a panel on Cambridge’s meteoric rise to the top of both local and national commercial real estate markets. While the discussion focused on the area’s burgeoning development pipeline, speakers also provided insight on what the future holds for Cambridge, urbanization trends and the potential for a Boston-based Amazon HQ2. Below are just some of the key takeaways from the event:
Transwestern’s Steve Purpura kicked up off the program with a brief historic overview of the Cambridge office and lab markets:
- Prior to the Human Genome Project, Longwood Medical Area was much more active in terms of biotech R&D than Cambridge due to government funding.
- The late 1990s through Y2K was a period of robust growth in Cambridge. The commercial space markets were tight and Novartis’ entrance into the marketplace marked the first large, outside corporation set up shop here.
- During this time several blue chip technology firms also established a presence in Cambridge. However, the dot-com bust decimated the market and pushed vacancies above 25%.
- Since the early-2000’s recession, Cambridge has seen immense growth, particularly in its lab market, which is now 5 times larger than it was in the late 1990s.
- The area’s near-term outlook remains positive as quality lab space remains in short supply. Rents will likely climb to $100/SF as tenants pay a premium for access to talent and Cambridge’s collaborative environment.
Following the highlight of Cambridge’s evolution, the panel focused on four developers that are reshaping this market:
Alexandria Real Estate is bringing more office and lab product to the Kendall Square micromarket. Projects of interest include 100 Binney Street, which is now fully-occupied, the addition of 399 Binney Street to the One Kendall Square portfolio and the redevelopment of the Metropolitan Pipe site also on Binney Street.
Boston Properties recently began site work on the 486,000-square-foot “Akamile” at 145 Broadway, which will house Akamai Technologies’ global headquarters. This building will reportedly be among the most connected and sophisticated in the marketplace. Work also continues on the 280-unit Proto, providing more residential options in Kendall Square.
In addition to several hundred thousand square feet of commercial space at its Kendall Square development, MIT is working on redeveloping the Volpe Transportation Center site. This “hole in the Kendall Square donut” is currently undergoing rezoning with the city and will include 2.8M SF of mixed-use space.
DivcoWest is moving forward with the long-beleaguered Northpoint The 45-acre site is sandwiched between Cambridge, Somerville, and Boston, and when complete it will include 10 acres of open space and 4.5M SF of commercial space. Anchored by retail and residential, this new neighborhood will boast 2M SF of science and tech space; starting with a 430,000-square-foot speculative lab building.
One thing remains clear; the Cambridge market is continuing to grow and expand with no signs of stopping in the foreseeable future.