Cambridge in the Lead: An Overview of Development Transforming the Ever-Dominant Cambridge Market

By Michael Hoban
Sunday, September 17th, 2017


kendall_cra_aerial-600x399jpg

An aerial view of Cambridge’s Kendall Square, one of the most desirable locations nationwide for technology and pharmaceutical companies.


It should come as little surprise to anyone remotely connected with the commercial real estate (CRE) industry that the Cambridge CRE market is one of the – if not the – dominant life science and technology markets in the world today. Even with very little space available for both lab and office space, and developable parcels at a premium, Cambridge – particularly Kendall Square – still remains the prime target of technology and pharmaceutical companies seeking access to the highly-educated talent pool that Cambridge offers, despite soaring rents.


“When you think about the future of Cambridge, I think the rents are going to be in the $100s [per square foot (PSF)],” predicts life science and technology specialist Steve Purpura, Executive Managing Director at Transwestern and leader of the commercial brokerage’s Cambridge team. “There is very little limitation to what people would pay if they can get in front of the right labor, and that great labor is coming out of MIT and Harvard, and is working here already. Quality space that’s available for lab is essentially zero for the next 12-18 months, and the office market has got a little more that’s available – but not much.”


Purpura was the moderator for the recent NAIOP panel discussion “Cambridge: Still in the Lead,” held last Wednesday at the Hyatt Regency Boston. The panel featured representatives from the market’s most prominent property owners and developers, including Tom Andrews, Senior Vice President with Alexandria Real Estate Equities, Bryan Koop, Executive Vice President for Boston Properties’ Boston Region, Steven Marsh, Managing Director of Real Estate for the MIT Investment Management Company (MITIMCo), and Keith Wallace, Senior Managing Director and Head of Acquisitions for DivcoWest’s eastern region operations.


Purpura began the discussion by restating the importance of the Cambridge address to the world’s leading tech and bio companies. “When Facebook came into Greater Boston (looking for space), they didn’t even look in Boston, and I think that’s pretty indicative of what’s happened in Cambridge,” he told the gathering of approximately 450.


Purpura set the stage for the discussion by reminding the audience that while Cambridge is now viewed as the “absolutely bulletproof” darling of investors, it wasn’t always the case. He pointed to the post-dot-com bubble burst, where vacancy rates for both lab and office exceeded 25 percent. He also cited the potential pitfalls that Cambridge may face when competing with markets such as New York and the San Francisco Bay Area, including cost of construction, permitting issues and a lack of incentives. “So let’s enjoys the ride – I think we’ve got some legs left in us, but let’s look over our shoulder and see what our blind spots are and how can we get better, because not that long ago, it was not that great.”


Andrews led off the presentations with an overview of Alexandria’s Cambridge activity, which has been robust for over a decade. The Pasadena, CA-based firm owns and operates 5.85 million square feet of life science, office and lab property in Massachusetts, with 4.85 million square feet of that portfolio located in Cambridge and the inner suburbs. Alexandria recently made headlines when they brought their soon-to-be-completed 431,500-square-foot 100 Binney Street property in Kendall Square to 100 percent occupancy with the signing of Facebook to a 150,000-square-foot lease, in addition to venture-backed biotech startups Foghorn Therapeutics, Sigilon Therapeutics, Tango Therapeutics and TCR2 Therapeutics to approximately 22,000-square-foot leases each. 100 Binney will be anchored by Bristol-Myers Squibb, who has leased 208,000 square feet.


100-Binney-Street-Alexandria-Center-at-Kendall-Square-John-Moriarty-and-Associates-Construction-Alexandria-Real-Estate-Equities-Development-Elkus-Manfredi-Architects-Lab-Office-Biotech-Innovation-Space-Cambridge-MA-Build-to-Suit-Bristol-Myers-Squibbjpg

Kendall Square’s 100%-leased 100 Binney Street


Alexandria acquired 303 Binney Street, the 3.63-acre former Metropolitan Pipe & Supply site in Kendall Square, for $80 million in the spring, and has broken ground ground on 399 Binney Street, a speculative 172,500-square-foot building on an undeveloped parcel at the 7.88-acre, 644,771-square-foot One Kendall Square campus. “We’re going to hold that property long term, and we’re going to make good sound investments,” says Andrews of One Kendall, envisioning the kind of success the firm had with the 1.2-million-square-foot Technology Square, acquired in 2006.


399-Binney-Street-Kendall-Square-Cambridge-Office-Lab-Retail-Development-Alexandria-Real-Estate-Equities-Bargmann-Hendrie-Archetypejpg

399 Binney Street.


DivcoWest’s Wallace believes One Kendall, which Alexandria purchased from DivcoWest for $725 million in November 2016, has a huge upside. At the time of purchase, the building was fetching $50 PSF net rents for lab and $50 PSF gross office rents, according to Wallace. “We grew those rents to $60 PSF and $60 PSF – net and gross respectively, and when we sold the building to (Alexandria), we had just done an office deal at $75 PSF, and a 10,000-square-foot lab deal at $70 PSF net. People are going to think I’m crazy, but I don’t see why that real estate – in such close proximity to MIT – is not going to be worth $2,000 a foot.”


One-Kendall-Square-Cambridge-Alexandria-Real-Estate-Equities-Office-Retail-Laboratory-Developmentjpg

One Kendall Square.


Koop discussed two of Boston Properties’ current projects in Kendall Square: 145 Broadway, a 19-story, 453,768 square foot office tower dubbed the “Akamile” by Akamai Technologies, Inc., who has leased 100% of the building, and Proto, a 274-unit apartment complex located at 88 Ames Street featuring 16,000 square feet of retail. Koop describes the Akamile as “the most sophisticated building that our company has ever worked on – in terms of what’s going on, how it operates and the thoughtfulness of how the human beings inside these buildings work together. The client said to us, ‘We want to have the most connected building – ever – so that our people can connect with each other.” The “mile” refers to the passages throughout the building that connect their people, that when tallied up, total close to one mile.


145-Broadway-Kendall-Square-Office-Retail-Space-For-Lease-Cambridge-Boston-Properties-MXD-Development-Project-District-Pickard-Chilton-Stantec-Renderingjpg

145 Broadway/The Akamile.


Proto is a 22-story tower that will contain a mix of micro units and one and two-bedroom configurations, with 36 apartments designated as affordable. It is expected to help meet the needs of knowledge-based workers in the Kendall Square area, while creating a more active pedestrian friendly streetscape between Main Street and Broadway. What is also significant about the project is that it was not an actual buildable site. “We worked with the city to take a piece of the road to come up with a site because residential was that important to the Cambridge Redevelopment Authority,” explained Koop.


88-Ames-Street-Kendall-Square-Cambridge-Residential-Retail-Tower-Development-Boston-Properties-John-Moriarty-Assocaites-J-Derenzo-Companies-Construction-FXFOWLE-Architect-Renderingpng

Proto.


MITIMCo’s Marsh began his segment by discussing the three principal trends in the market: Innovation and Collaboration, where information is moving so fast that it is paramount for organizations to be near the source of the knowledge; Urbanization; and what he described as the “notion of convergence”, where multiple disciplines such as engineering, data and life sciences are integrating to solve complex problems.


MITIMCo is finishing up the permitting process for the 1.9-million-square-foot MIT Kendall Square Initiative project, which will be comprised of office, residential, retail, research/development, and graduate student housing space. MITIMCo is also in the process of permitting and rezoning the massive, 14-acre Volpe Center site, located in the heart of Kendall Square. “We’re trying to create the right environment in Cambridge, because it is about people,” says Marsh. “It’s about creating a place where people want to be, and we’re trying to integrate what we do into the fabric of the city, creating new innovation capacity, amenities, housing and a variety of other things that we think make really good communities.”


33501521496_3eaaa6edab_hjpg

Aerial view of the MIT Kendall Square Initiative development.


Wallace brought the gathering up to speed on NorthPoint, the fully permitted, 45-acre development site in East Cambridge that has changed hands multiple times since Spaulding and Slye first broke ground on the project in 2005. It has remained a source of puzzlement and frustration for previous developers, which Wallace acknowledges. “Obviously, it’s had some fits and starts over the last 20 years, so it’s an ambitious play, but I think we were attracted to what was going on in Cambridge with close to zero vacancy in the office market.”


NorthPoint is permitted and planned for 2 million square feet of science and tech space, 2.4 million square feet of residential and also 100,000 square feet of retail, which Wallace believes is the key to the project’s success. And while there has been no commercial tenant that has “taken the leap of faith,” DivcoWest, in partnership with The HYM Investment Group, is constructing a 430,000-square-foot speculative science and technology building at 250 North Street in NorthPoint, which should be delivered by the second quarter of 2019. A second 400,000-square-foot building at NorthPoint is in pre-schematic design. “Our idea was always to be prepared for a large-use – a la Amazon,” Wallace joked. “We’re not ambitious enough to go spec on lab…but we’ll feel the market out.”


NorthPoint-Parcel-JK-Development-Cambridge-Somerville-Office-Lab-Retail-Building-NorthPoint-Common-Baldwin-Parkjpg

DivcoWest’s upcoming speculative office building at NorthPoint.

Related News

Hero 1500900 hq2candidates
Amazon shortlists Boston as one of 20 contenders to host second headquarters
Jan 18, 2018 - Amazon has released a list of 20 cities it is considering to host its’ $...
Six key upcoming boston area new construction office buildings
Six Key Upcoming Boston-Area New-Construction Office Buildings
Jan 15, 2018 - With influential global companies including General Electric and Philips...
Starry internet los angeles washington dc
Starry Announces Launch of Starry Internet in Los Angeles and Washington, DC
Jan 09, 2018 - Starry Announces Launch of Starry Internet in Los Angeles and Washington...
Boston s most exquisite new construction penthouse condominium residences
Boston’s Most Exquisite New-Construction Penthouse Condominium Residences
Jan 07, 2018 - Boston’s building boom has created several distinctive penthouse residen...
Boston property ventures bpv qcare quincy ma
Boston Property Ventures Donates Sleigh Full of Gifts To QCARE Families
Jan 05, 2018 - As a generous supporter of QCARE (Quincy After School Child Care), Bosto...
Top boston area new construction development projects of 2017
Top Boston-Area New-Construction Development Projects of 2017
Jan 05, 2018 - 2017 was a banner year for Boston real estate, a year in which multiple ...
Peter mcloughlin boston property ventures quincy ma
Boston Property Ventures CEO Peter McLoughlin takes initiative in early education leadership with election to QCARE Board
Dec 27, 2017 - Peter McLoughlin, CEO and Owner of Quincy-based residential development ...
Fan pier development seaport district boston
Next phase of Fan Pier would include housing instead of approved hotel, as well as office building
Dec 20, 2017 - Next phase of Fan Pier would include housing instead of approved hotel, ...
The residence at melrose station vinnin square lcb senior living callahan construction managers
Callahan completes two new senior living communities
Dec 15, 2017 - Callahan Construction Managers has completed two new senior living commu...
Cbi consulting vidaris
Vidaris, Inc. Acquires CBI Consulting
Dec 07, 2017 - New York City (December 7, 2017). Vidaris, a leading architectural consu...
Bostons coolest residential communal amenity spaces
Boston’s Coolest Residential Communal Amenity Spaces
Nov 28, 2017 - With Boston’s latest building boom, multiple residential apartment and c...
Rapid7 the hub on causeway
Boston’s Up-and-Coming Uptown Neighborhood: Why Bulfinch Triangle is Boston’s Next Tech Hub
Nov 26, 2017 - Technology companies take notice: with a diverse mix of existing and upc...
Top real estate development projects new construction buildings boston area october 2017 bldup
Top Boston-Area Developments and New-Construction Buildings of October 2017
Nov 13, 2017 - Below are BLDUP's most active* Boston-area real estate developments and ...
Union point weymouth rockland abington ma route 3 smart sustainable city
1,550 acres of smart, sustainable development taking shape at Union Point, just 12 miles south of Boston
Nov 06, 2017 - Located at the intersecting point of the towns of Weymouth, Rockland and...
Dudley square boston roxbury real estate development projects
Dudley Square: Boston’s up-and-coming development epicenter
Oct 31, 2017 - Geographically, the City of Boston’s center is Dudley Square, a storied,...
Top boston area new construction apartments for lease
Top Boston-Area New-Construction Apartment Buildings of September 2017
Oct 26, 2017 - Below are BLDUP's most active* Boston-area new-construction apartment bu...
Boston ma amazon hq2 bid
Envisioning Amazon in Massachusetts: An Overview of Sites Under Consideration
Oct 25, 2017 - Perhaps the most anticipated real estate related topic at the moment is ...
Top boston area new construction condominium buildings
Top Boston-Area New-Construction Condominium Buildings of September 2017
Oct 24, 2017 - Top Boston-Area New-Construction Condominium Buildings of September 2017
Top boston area new construction office buildings
Top Boston-Area New-Construction Office Buildings of September 2017
Oct 24, 2017 - Below are BLDUP's most active* proposed and upcoming Boston-area new-con...
Top new construction buildings boston area september 2017
Top Boston-Area Acquisitions and New-Construction Buildings of September 2017
Oct 22, 2017 - Below are BLDUP's most active* Boston-area real estate acquisitions and ...
Treviicos herbert hoover dike project south florida
Treviicos restores and secures Herbert Hoover Dike, crucial South Florida flood control system
Oct 19, 2017 - Treviicos restores and secures Herbert Hoover Dike, crucial South Florid...
Dji 0039
Treviicos improves New Orleans’ flood resilience with Southeast Louisiana drainage program
Sep 18, 2017 - Underground construction specialist Treviicos, headquartered in Charlest...
Pool image 2
Top 10 New-Construction Boston-Area Condominium Buildings
Sep 17, 2017 - Below are BLDUP's most active* Boston-area new-construction condominium ...
Boston area top new construction office buildings developments
Top Boston-Area New-Construction Office Buildings
Sep 14, 2017 - Below are BLDUP's most active* Boston-area new-construction office build...
Amazon hq2 second headquarters project
Amazon launches search for second North American headquarters, with Boston in the running
Sep 11, 2017 - Leading internet retailer and technology company Amazon, headquartered i...
Top new multifamily buildings new construction boston
Top New-Construction Multifamily Buildings in Boston
Sep 01, 2017 - Below are BLDUP's most active* Boston-area new-construction multifamily ...
Layers
Gridlock: A Case for Alternative Transportation Improvements in the Seaport District
Aug 20, 2017 - Boston’s Seaport Innovation District continues to be one of the hottest,...
July 2017 bldup top buildings
July 2017's Top Buildings
Aug 02, 2017 - BLDUP's most active new buildings, development projects and developme...
Treviicos ground engineering construction 20th anniversary
North American ground engineering leader Treviicos celebrates 20th anniversary
Aug 02, 2017 - Treviicos, a national leader in ground engineering and construction loca...
City realty cambridge street harvard avenue franklin street braintree street allston brighton development acquisition
City Realty invests $15.5 million in Allston with acquisition of three developable parcels
Jul 25, 2017 - City Realty invests $15.5 million in Allston with acquisition of three d...
Avantage newbury caffe nero 205 207 newbury street
Caffe Nero coming to Avantage Newbury retail collection in Back Bay
Jul 20, 2017 - Caffe Nero coming to Avantage Newbury retail collection in Back Bay
Echelon luxury residences seaport square parcels m1 m2 cottonwood management celona capital regent hotels apartments retail development
June 2017's Top Buildings
Jul 10, 2017 - BLDUP's most active new buildings, upcoming development projects and dev...
Air rights development
Air Rights Development: Bridging old urban gaps with transformative impetus for positive advancement
Jun 22, 2017 - Air Rights Development: Bridging old urban gaps with transformative impe...
Union square somerville development us2
2.3-million-square-foot mixed-use development in Somerville’s Union Square moves forward with zoning approval
Jun 14, 2017 - 2.3-million-square-foot mixed-use development in Somerville’s Union Squa...
Boston landing
Infill Stations: Attainable Catalysts for Transformative Transit-Oriented Development
Jun 07, 2017 - It’s natural that extensions of rapid transit or commuter rail lines wou...
Connected buildings city of boston broadband internet wiredscore
City of Boston takes key step towards ensuring top-notch broadband internet connectivity in development projects
Jun 06, 2017 - The Boston Planning & Development Agency (BPDA) and the City of Boston’s...
Screen shot 2017 05 18 at 3.32.32 pm %281%29
The MBTA Blue Line: Overlooked Real Estate Corridor Turned Hotbed for Investment
May 18, 2017 - The MBTA Blue Line: Overlooked Real Estate Corridor Turned Hotbed for In...
Boston landing
Transit-Oriented Development Transforms Brighton’s Boston Landing
May 17, 2017 - With a new commuter rail station set to open this morning, Boston Landin...
Image1
Green Line Extension: A catalyst for sustainable mixed-use development
May 05, 2017 - After decades of delays and over a billion dollars worth of cost overrun...
Blue hill avenue station
Fairmount Corridor: Boston’s next transit-oriented development hotspot
Apr 27, 2017 - In the recent Go Boston 2030 transportation action plan, the City of Bos...
Wynn everett casino suffolk construction 1
Flush: Powering Boston’s landmark developments with state-of-the-art temporary restroom solutions
Apr 25, 2017 - As multiple large developments rise into Boston’s sky, Flush maintains a...
Divine design center 20m 8414
Envision your new interior at Divine Design Center’s new Battery Wharf waterfront showroom
Apr 04, 2017 - Envision your new interior at Divine Design Center’s new Battery Wharf w...
103 arch 153 milk 172 184 high financial district acquisition the hoffman companies boston
Hoffman acquires three Financial District buildings for $63.7 million
Apr 02, 2017 - Hoffman acquires three Financial District buildings for $63.7 million
Screen shot 2016 11 30 at 9.45.05 pm
The Developer's Agenda - Bulfinch Triangle In Focus
Mar 28, 2017 - Executive Luncheon This Thursday at the UMass Club
Screen shot 2017 03 14 at 2.47.23 pm
Municipal Harbor Plan approval enables two landmark waterfront developments, ensures long-term climate change resiliency
Mar 14, 2017 - The Boston Planning and Development Agency (BPDA) has approved a new Mun...
Flush
Equip your construction site with Flush’s deluxe restroom solutions
Mar 08, 2017 - Site management is a significant undertaking no matter the size and scop...
A new blueprint for the seaport active uses envisioned in updated seaport square plan
A New Blueprint for the Seaport: Active Uses Envisioned in Updated Seaport Square Plan
Feb 21, 2017 - Within the last 20 years, the Seaport Innovation District has evolved fr...
Fenway catalyzer 2017 diagram
The Fenway Catalyzer
Feb 07, 2017 - For decades, massive asphalt parking lots dominated the landscape around...
Walter harnett vidaris
Vidaris, Impacting Boston’s Future Skyline
Jan 29, 2017 - In Boston’s changing cityscape, Vidaris is helping to build the next gen...
Divine design center kitchen renovation boston
The impact of the kitchen in the modern home
Jan 29, 2017 - For those searching for a home or apartment, especially in Boston’s high...
Header devices 2
Simplify your service contracting operations with streamlined software
Jan 24, 2017 - As information technology continues to evolve, standards for service con...
99 chauncy 101 summer
TIAA acquires two key Downtown Crossing office properties from Synergy Investments for $75M total
Dec 09, 2016 - Synergy Investments has sold two key Downtown Crossing office properties...
Suburban workspace
Four New Suburban Boston Office Developments
Dec 07, 2016 - Boston's suburbs offer innovative office spaces set in a unique, relaxin...
Five new buildings topping off boston
Five New Buildings Topping Off
Nov 30, 2016 - 2017 will bring several exciting new buildings to Boston. These building...
Union square somerville new apartments condos retail development dellbrook jks construction
Dellbrook | JKS energizes Somerville’s Union Square with two new buildings
Nov 27, 2016 - Dellbrook | JKS has successfully completed two new buildings, Union Squa...
Apartments now leasing boston
Four Exciting New Luxury Apartment Buildings Now Leasing in Boston
Nov 17, 2016 - New luxury apartment buildings are rapidly rising into the Boston skylin...
5 companies logos
Five New CRE Technology Movers and Shakers
Nov 11, 2016 - Today's hot real estate market presents endless opportunity for innovati...
Columbus center original plan
Columbus Center
Oct 30, 2016 - Developers and MassDOT consider Columbus Center revival
One dalton
Boston's Most Demanded Building Amenities
Oct 06, 2016 - The country's most luxurious new development boast some extreme amenitie...
Bpda boston planning development agency
New identity for BRA
Sep 28, 2016 - Boston Redevelopment Authority rebranded Boston Planning & Development A...