by Aaron Jodka
It has been called the most innovative square mile on the planet. Home to world-class research institutions, Kendall Square has created a blueprint for university/industry partnerships and become the epicenter of the life science R&D industry and a tech hot spot, boasting the highest rents in the metro. A who’s who in the tech and life science industries have operations here: Facebook, Amazon, Microsoft, IBM Watson, Akamai, Biogen, Novartis, Genzyme, Sanofi, and bluebird bio, to name a few. The Cambridge Innovation Center (CIC) has propelled the growth of numerous companies since its inception in the 1990s, venture capital firms are right in the thick of it, and MIT continues to drive innovation in the area. The university’s latest venture, “The Engine,” aims to solve the world’s biggest problems in fields from energy to life sciences, supporting companies until they’re ready for venture capital funding. The area’s innovation continues to place it at the forefront of what’s next.
Development keeps pushing forward, since there’s virtually no vacancy in the market for office or lab users. Talent is drawn to the area for its collaborative fabric and well-paying jobs, and tenants want to be here to attract that talent and be on the cutting edge. Class A office rents are in the mid-to-upper $70s/SF, with individual spaces even topping $80/SF, and lab rents are even higher. Even as new development along Binney Street is bringing 930,000 SF of new lab product to market thanks to Alexandria, it is nearly all spoken for. The last large block of underway space is at 100 Binney Street.
Plans are in the works for more development, but tenants are not expected to see any rent or space relief in the next couple of years. Boston Properties’ Kendall Square Urban Renewal Plan will add about 600,000 SF of office space, with a rumored anchor tenant in place. MIT and its Kendall Square Initiative will bring six new buildings on line, including repurposed retail, residences, academic space, and research and development properties. The GSA is settling on a winning bidder for the U.S. Department of Transportation’s Volpe Center site, to be announced in the weeks ahead. Volpe Center is likely to be a $1 billion-plus development.
Kendall Square is no stranger to rapid development. Product cannot come to market fast enough in this white-hot innovation hub: Since the end of 2001, lab market space there has more than doubled, expanding 119.5%, and nearly one-quarter of the area’s lab market has been built since the end of 2014. A striking illustration of this is in the chart below, showing the share of total lab stock by year built since 2001.