Q1-2018-BiotechReport

Q1

BOSTON / SUBURBAN LAB

2018

TOTAL INVENTORY (SF)

TOTAL VACANT (SF)

TOTAL VACANCY RATE

Q1 NET ABSORPTION (SF)

YTD NET ABSORPTION (SF)

Boston

5,705,748

261,927

4.6%

86,379

86,379

Suburban

7,623,620

705,637

9.3%

182,371

182,371

100 200 300 400 500 600 700

2013 2013 2014 2014 2014 2014 2015 2015 015

TOTAL

13,329,368

967,564

7.3%

268,750

268,750

NET ABSORPTION

2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 TRENDS • Biotech firms continue cluster to outside of Cambridge; benefiting from demand for space in relief valve markets like Watertown, Waltham, Bedford, and Brighton. First quarter net absorption totaled roughly 269,000 square feet in Boston and the Suburbs combined, and vacancies declined to 7.3%. The future remains bright for life science hubs outside of Cambridge as demand for lab space far outstrips supply. While tenant preferences will remain focused on Kendall Square, the lack of space and frothy pricing will push growth out along Route 2 and the Route 128 Corridor. • Longwood Center, the newest lab building in the Longwood Medical Area, is now fully-occupied just three years after delivery. Dana-Farber Cancer Institute expanded into another 83,550 square feet this quarter; now occupying more than half of the building. There are only a handful of large blocks of space left in the Boston Lab market, with 80 Guest Street and 27 Drydock Avenue boasting the only availabilities above 30,000 square feet. • Drug manufacturing operations are moving to suburban locales with accessibility to R&D operations in Cambridge. High costs and a non-existent inventory have led firms such as Alnylam and Moderna to establish manufacturing facilities in the Route 128 Corridor. Activity is moving further out to the Route 495 area as well. LakePharma, Inc. recently acquired 35 South Street in Hopkinton and plans to launch a 69,000-square-foot GMP manufacturing facility in the building. King Street Properties is throwing its hat into the ring as well. The Cambridge-based life science real estate owner purchased the former headquarters of the MetroWest Daily News on New York Avenue in Framingham, and is planning to create a life science hub at the site, which could include manufacturing space. Expect this trend to continue as scientists and other R&D employees seek direct access to production operations. 2015 2016 2016 2016 2016 2017 2017 • Tenants are flocking to the Route 128 West Submarket. With the addition of two new tenants, the LINX in Watertown is fully leased up. Aileron Therapeutics signed a lease for 18,609 square feet, and Kala Pharmaceutics is taking down more than 66,000 square feet in the building. The former is relocating from Waltham, and the latter is moving in from Cambridge. Visterra is also making the jump from Cambridge as the biotech company has outgrown its Kendall Square facility. Visterra executed a lease for 27,000 square feet at a recently converted lab building on Second Avenue in Waltham. • The area’s IPO and venture funding landscape remains solid. Boston-based resTORbio recently raised $85 million in its initial public offering, and Bedford- based Homology Medicine filed a $144 million IPO in March. Regarding venture capital, Finch Therapeutics ($36 million), Partner Therapeutics ($60 million), and Stoke Therapeutics ($40 million) were among several companies located outside of Cambridge that raised funds in the first quarter.

100 200 300 400 500 600 700

SF (000s)

-300 -200 -100 0

2013

2014

2015

2016

2017

2018

SF (000s)

Boston Suburbs

-300 -200 -100 0

2013

2014

2015

2016

2017

2018

Boston Suburbs

FUTURE SUPPLY Future Supply

144,400 SF

Future Supply

TD Net orption 86,379 182,371 268,750

214,910 SF

Available

Leased

NOTABLE TRANSACTIONS Notable Transactions

Dana-Farber

Kala Pharmaceuticals

Available

Leased

Visterra

Aileron Therapeutics

MicroMedicine

10K SF

30K SF

50K SF

70K SF

90K SF

Route 128 West

Boston

2