CAMBRIDGE OFFICE & LAB MARKET REPORT

FOURTH QUARTER 2019

BIG RENTS AND LOW VACANCY ACROSS THE BOARDLong considered one of the nation’s most historical and steadfast cities, Greater Boston has undergone

an evolution over the past decade and become one of the world’s most dynamic gateway cities and top

tier investment markets. A global icon for its outstanding research universities, medical centers and

technological advancement, Greater Boston’s expansion has been fueled by its diverse economy and

record setting venture capital and NIH funding.

Not only has the local population grown at a rate well above the national average, but the job market

has kept pace with the state’s unemployment rate measuring below three percent. The marked

increase in both population and job growth can largely be attributed to over 40% of students from local

universities and colleges that are electing to remain in Boston following graduation. Not surprisingly,

Greater Boston’s workforce has become one of the nation’s most youthful, with 35% of its workers

between the ages of 20 and 34 compared to the national average of only 20%.

The region’s strengthening demographics and economy have promoted a transformative phase across

the state that has ushered in new retail, residential and infrastructure development that has not been

achieved in decades. Looking forward, expect durable market conditions and a diversified economy to

guide the region’s commercial real estate market to a strong performance over the next several years.

2.9%NOVEMBER

MASSACHUSETTS UNEMPLOYMENT

3.5%NOVEMBER NATIONAL

UNEMPLOYMENT

$11.5BGREATER BOSTON

VC FUNDING (2018)

#1NATIONALLY

R&D FUNDING PER CAPITA

MARKET TRENDS

GLOBAL DESTINATIONWorld leader in medical innovation and

technology advancement

TECHNOLOGY & INNOVATION HUB

Fortune 500 leaders and 1,900 homegrown startups

LIFE SCIENCE SECTOR SURGESHuge demand from National and

International companies

WHERE IS THE RELIEF?Small and medium size users face

historic competition

MARKET RATES KEEP RISING

Demand out-pacing supply,no relief for price sensitive users

COWORKING SPACE DISRUPTING MARKET

Tenants like flexibility and shorter term commitments

INVESTMENT SALES PRICING CLIMBING

Properties are setting record pricing

$28.00

$34.00

$40.00

$46.00

$52.00

$58.00

$64.00

$70.00

$76.00

$82.00

$88.00

Average Asking Rate

201920182017201620152014201320122011201020092008200720060%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Direct Vacancy (%)

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00

$75.00

Average Asking Rate

201920182017201620152014201320122011201020092008200720060%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Direct Vacancy (%)

OFFICE CLASS AASKING RATE VS. DIRECT VACANCY

OFFICE CLASS BASKING RATE VS. DIRECT VACANCY

DIRECT VACANCY RATE BY SUBMARKET

0% 1% 2% 3% 4% 5% 6% 7% 8%

East - Lab

Mid - Lab

East - O�ce

Mid - O�ce

West - O�ce

West - Lab

VACANCY

3.2%

CAMBRIDGE OFFICE STATS AT A GLANCE

SUBLEASE

3.3%ABSORPTION

(158,000) sf

ASKING RATE

$80.72/sfAVAILABILITY

7.5%CONSTRUCTION

2.8MM sf

WEST CAMBRIDGE

OFFICE $54.09/SF

LAB $73.94/SF NNN

MID CAMBRIDGE

OFFICE $73.71/SF

LAB $85.25/SF NNN

EAST CAMBRIDGE

OFFICE $92.85/SF

LAB $92.95/SF NNN

CLASS A & B OFFICE

#3.0% DIRECT VACANCY

#4.2% SUBLEASE AVAILABILITY

#8.2% TOTAL AVAILABILITY

(105,250) SF 12-MONTH ABSORPTION

#$85.68/SF AVERAGE ASKING RATE

• Akamai took occupancy of its brand new 480,000 square foot

property at 145 Broadway following approximately two years

of construction lead by the Boston Properties development

team. Google has subleased 145,000 square feet from Akamai

at its former neighboring 150 Broadway location. Meanwhile,

construction commenced at 325 Main Street where Boston

Properties is building a 385,000 square foot tower for Google

which they plan to occupy before the end of 2022. The timing

of the large tenants worked perfectly and allowed for a highly

orchestrated musical chairs operation with limited disruption

and downtime for both tenant and landlord.

• At MIT’s 238 Main Street development, Beam Therapeutics

recently committed to 127,000 square feet of premium office

space. The property which is currently under construction in the

heart of Kendall Square has already leased 64,000 square feet to

Bayer. Both tenants are expected to take occupancy in the third

quarter of 2021 when construction is complete.

• An MIT-affiliated tech incubator firm will expand to an

underused university-owned building outside Central Square

at 750 Main Street. The aptly named “Engine” will span over

200,000 square feet of shared office, fabrication, and lab

space. The space will help retain burgeoning companies within

Cambridge by affording opportunities and availability for tenants

under 10,000 square feet who otherwise face extreme obstacles

finding quality space in the hotly contested market.

• The investment sales market continued churning with quality

over quantity ringing true. Just two years after purchasing

the 625 Mount Auburn street for $44.5 million, The Davis

Companies divested the asset to Paradigm Properties for $57.5

million. The property, located on the outskirts of Cambridge

towards Watertown, has room for rents to run and the omni

present lab conversion potential. Market rumors suggest that

Divco West has selected a buyer for 955 Massachusetts Avenue

and that pricing will approach $100 million or over $1,100 per

square foot for the 100% office building outside Central Square.

ADDRESS SUBMARKET TENANT SF

120 Brookline Street Mid Cambridge Wistia 25,000

245 First Street East Cambridge Regus 18,500

675 Massachusetts Avenue Mid Cambridge Litmus 15,600

One Alewife Center West Cambridge Onshape 15,300

955 Massachusetts Avenue Mid Cambridge Liquidspace 5,150

NOTABLE RECENT LEASES

CLASS A & B OFFICE

$25.00

$32.00

$39.00

$46.00

$53.00

$60.00

$67.00

$74.00

$81.00

$88.00

$95.00

20192018201720162015201420132012201120102009200820070.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

2019201820172016201520142013201220112010200920082007

AVERAGE DIRECT VACANCY BY SUBMARKET

AVERAGE ASKING RATE BY SUBMARKET

West Mid East

OFFICE & LAB DEVELOPMENT PIPELINE

250 WATER Lab

314 MAIN STREET Office

222 JACOBS STREET Office

238 MAIN STREET Lab

400/500 CAMBRIDGE DISCOVERY Lab

325 MAIN STREET Office

350 DAWES Office

450 DAWES Lab

CLASS A & B LAB

#0.6% DIRECT VACANCY

#1.2% SUBLEASE AVAILABILITY

#2.7% TOTAL AVAILABILITY

#115,050 SF 12-MONTH ABSORPTION

#$89.81/SF AVERAGE ASKING RATE (NNN)

• In one of the region’s largest annual transactions, The ARC (35

Cambridgepark Drive), was purchased by Healthpeak and King

Street Properties. The newly developed 224,000 square foot

lab facility in West Cambridge conveyed for $332.5 million or a

staggering $1,485 per square foot. The building is 100 percent

leased to Syros Pharmaceuticals, Ribon Therapeutics, Codiak,

Glympse Bio, and Eisai. The property, which leased up in under

a year, has seen rents move from the mid $60’s NNN to the mid

$80’s NNN today.

• On the other side of the train tracks from Cambridgepark

Drive, the Quadrangle neighborhood, consisting of properties

bound by Concord, Blanchard and Fawcett Street experienced

an active second half of 2019. Mirroring their success at The

ARC, the Davis Companies and Invesco leased up an empty 75

Moulton Street to Invaio Sciences and more recently secured

Civetta Therapeutics for 30,000 square feet at the newly

converted office to lab property at 10 Wilson Road. Hoping

to draft off the success of Davis and Invesco, Cabot Cabot &

Forbes are seeking the development rights for up to one million

square feet in the same neighborhood. The proposal will likely

require the installation of a pedestrian footbridge to connect

the Alewife MBTA station, however the location of the bridge

remains unclear.

• While available lab space remains scarce across Greater Boston,

an even more specific space type designed for animal research

(vivariums), is extremely rare due to its high cost and heavily

regulated permitting process. Shared space provider, SmartLabs,

has recently leased 16,000 square feet at 301 Binney Street and

will renovate an already existing animal research facility into

state of the art space. The new location will allow emerging and

later-stage biotech companies access to the highly desirable

space without having to commit their own capital and time

to construct similar facilities within the confines of their own

laboratories.

• Hoping to bring much needed relief to the market, a handful of

projects within Cambridge and the immediately surrounding

Inner Suburban locations have recently commenced

construction. At Cambridge Crossing, while construction

churned along for Sanofi’s new facility, the DivcoWest team has

moved forward on a speculative basis with 250 Water Street

which will deliver roughly 400,000 square feet of commercial

space during 2022.

ADDRESS SUBMARKET TENANT SF

20 Sidney Street Mid Cambridge Millennium Pharmaceuticals 50,000

Cambridge Discovery Park West Cambridge Arbor Biotechnologies 36,000

10 Wilson Road West Cambridge Civetta Therapeutics 29,900

Cambridge Discovery Park West Cambridge Simcere Innovation 26,300

301 Binney Street East Cambridge SmartLabs 16,000

320 Bent Street East Cambridge Momenta Pharmaceuticals 15,500

NOTABLE RECENT LEASES

CLASS A & B LAB

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

201920182017201620152014201320122011201020092008

AVERAGE DIRECT VACANCY BY SUBMARKET

AVERAGE ASKING RATE BY SUBMARKET

West Mid East

$25.00

$32.00

$39.00

$46.00

$53.00

$60.00

$67.00

$74.00

$81.00

$88.00

$95.00

201920182017201620152014201320122011201020092008

BEHIND THE SCENES WHATS DRIVING DEMAND?

130,000

PEOPLE WORK IN CAMBRIDGE

11

OF FORBES’ 25 LARGEST TECH COMPANIES RESIDE IN CAMBRIDGE

$1.4m

MEDIAN PRICE FOR SINGLE-FAMILY HOME

VC FUNDING GREATER BOSTON

VC FUNDING PER CAPITA

CAMBRIDGE RESIDENTS HAVE A BACHELORS DEGREE OR HIGHER

$122,000

AVERAGE ANNUAL SALARYTECHNOLOGYINCUBATORS

FUNDING PER CAPITA FOR 20+ YEARS

DEMAND OUTPACING

SUPPLY

NEW ENGINES

OFFICE & LAB REPORT STATS

OFFICETotal

Inventory (SF)Direct

VacancySublease

AvailabilityTotal

Availability Quarterly

Absorption (SF)12 Month

Absorption (SF)Average

Asking Rate

TOTAL A & BTOTAL A & B

Cambridge 11,117,200 3.2% 3.3% 7.5% (63,050) (157,550) $80.72

East Cambridge 6,051,350 2.7% 3.3% 6.7% (38,650) (107,300) $92.85

Mid Cambridge 3,135,700 3.0% 1.9% 5.4% (19,750) (29,650) $73.71

West Cambridge 1,930,150 4.7% 5.7% 13.4% (4,650) (20,550) $54.09

CLASS A

Cambridge 7,360,450 3.0% 4.2% 8.2% (35,600) (105,300) $85.68

East Cambridge 5,032,500 2.6% 3.5% 6.6% (22,100) (74,400) $93.71

Mid Cambridge 1,224,500 1.4% 3.0% 4.3% (10,200) (4,150) $76.25

West Cambridge 1,103,450 6.4% 8.8% 19.7% (3,250) (26,750) $59.50

CLASS B

Cambridge 3,756,700 3.5% 1.5% 6.0% (27,450) (52,250) $71.02

East Cambridge 1,018,850 3.6% 2.0% 6.8% (16,500) (32,900) $88.60

Mid Cambridge 1,911,200 4.0% 1.2% 6.0% (9,500) (25,550) $72.08

West Cambridge 826,650 2.5% 1.5% 4.9% (1,350) 6,150 $46.88

LABTotal

Inventory (SF)Direct

VacancySublease

AvailabilityTotal

Availability Quarterly

Absorption (SF)12 Month

Absorption (SF)Average

Asking Rate

TOTAL A & B

Cambridge 14,662,550 0.6% 1.2% 2.7% 600 115,000 $89.81

East Cambridge 9,660,700 0.3% 0.8% 1.5% (26,650) (26,650) $92.95

Mid Cambridge 4,336,800 0.4% 0.6% 1.9% - 2,550 $85.25

West Cambridge 665,000 6.5% 12.0% 24.2% 27,300 139,150 $73.94

CLASS A

Cambridge 12,174,400 0.3% 0.7% 1.4% (26,650) (26,650) $91.03

East Cambridge 9,005,750 0.3% 0.8% 1.7% (26,650) (26,650) $93.20

Mid Cambridge 3,039,550 0.2% 0.0% 0.2% - - $85.00

West Cambridge 129,100 0.0% 8.1% 8.1% - - $82.00

CLASS B

Cambridge 2,488,100 0.5% 2.0% 5.6% - 7,500 $83.82

East Cambridge 654,950 0.0% 0.0% 0.0% - - $89.50

Mid Cambridge 1,297,250 0.9% 1.9% 6.0% - 2,500 $85.83

West Cambridge 535,600 0.0% 4.6% 11.5% - 5,000 $72.00

Lincoln Property Company | 53 State Street, 8th Floor, Boston, MA | 617.951.4100 | LPCBoston.com

Lincoln Property Company’s Cambridge Office & Lab Report is produced by the Boston Office’s research team in collaboration with our Cambridge Brokerage Group. If you have any questions regarding market conditions and the information found in this report, please contact Ethan Robert.

ETHAN ROBERTDirector of Research 617.951.4160 erobert@lpc.com