The life sciences building boom

[Cotuit]

The life sciences building boom

Almost unseen, quiet explosion rivals Boston's great construction sprees

By Jeffrey Krasner, Globe Staff | January 31, 2005

The biggest addition to the Boston skyline in the past five years was One Lincoln Street, a gleaming, Art Deco-influenced office tower that dominates the skyline for commuters from the south and became the new home of State Street Corp. It added 1 million square feet of office space, the biggest single chunk since Two International Place opened a decade earlier.

But that's only one sixth the amount of life sciences space -- lab, research, and housing -- created, or expected to be created, between 2003 and 2007.

Almost unseen, an unprecedented building boom is taking place. More than two dozen life-sciences projects are underway, are nearing construction, or are recently completed-- laboratories, hospital expansions, academic centers and housing for scientists. Together, they add up to a quiet explosion that rivals the great building spurts in Boston.

''There's a blazing boom going on here that no one's paying attention to," said Eric Bacon, executive vice president of Leggat McCall Properties LLC in Boston, a real estate firm with expertise managing specialized life-science projects. ''You can't go to a hospital in Boston that's not under construction. There are all these little projects but nobody sees them."

Case in point is Massachusetts General Hospital's Yawkey Center for Outpatient Care. The striking, angular building, sheathed in green-tinted glass and graced with industrial-look shades with exposed cable supports, is easy to miss. It's tucked away in a tight corner of MGH's crowded campus, bound by a parking garage and the Charles Street Jail. The cantilevered entrance hood is squeezed into a tight alleyway. The $219 million building is now home to MGH's orthopedics, cancer, fertility, and women's and children's health centers.

But if there's a marquee building that exemplifies the life science boom it is Genzyme's $140 million headquarters just outside of Kendall Square in East Cambridge, the epicenter of the biotech cluster in Massachusetts. Genzyme spent $140 million on the 12-story building, about $23 million of that to create an environmentally exemplary structure that uses less energy for heating, cooling and lighting. The interior is dominated by a giant atrium filled with light from solar collectors, and a rhomboid staircase in teak that visitors ascend to reach the security desk.

But as it is tucked behind a power plant, it can barely be spotted from the Boston side of the Charles River. Most of the other life science projects are even less visible.

Boston's bio building boom is considerably smaller, measured by total square feet, than the city's office-building expansion from 1984 to 1990, which generated 45 million square feet, or an average 6.5 million square feet of new space a year, according to Spaulding & Slye Colliers, a Boston real estate firm.

But the buildings are having a much bigger economic impact than the base numbers would suggest. Laboratory and hospital building space costs at least twice as much to construct as first-class office space. Labs require special ventilation systems to move massive amounts of air. Extra plumbing is required for super pure water, acid disposal, natural gas, vacuum, and other things scientists require at the work bench. Special wiring is required for all of the equipment. And electrical generators -- sometimes two of them to create a fail-safe system -- are needed to keep freezers cold and animals alive should the power go out.

While class A office space might cost $160 to $225 a square foot, fully outfitted for tenants, a lab could easily cost $350 a square foot, said John Moriarty, president of John Moriarty Associates of Winchester, a general contractor specializing in life-science building. Moriarty points to a lab being built atop Charles River Plaza, the shopping center on Cambridge Street, which will provide 355,000 square feet of lab space for Massachusetts General Hospital, along with 265,000 square feet for other uses. When it came time to choose a crane for the building, he wasn't thinking about lifting girders, windows, or granite. He needed something strong enough to lift the two giant air movers placed atop the building.

''It's spectacularly complex to build something that complicated around an operating shopping center," he said.

The lab building, developed by the Davis Cos. for MGH and other tenants, will be completed in April and is expected to cost about $300 million.

There are several forces shaping the bio building boom, according to real estate experts.

''The first trend driving these expansions is the outdated nature of the entire country's medical research infrastructure," said Nancy J. Kelley, managing director of life sciences for Spaulding & Slye. ''On top of that there is the vast amount of investment in the scientific and medical area, both public and private, which has spurred the growth of research groups that need new and expanded space."

The epicenter of the new building is the Longwood Medical Area, the 213-acre space wedged between the Fenway and Huntington Avenue that is saturated with teaching hospitals, specialized clinics, and medical research facilities.

Last fall, Merck & Co., the New Jersey pharmaceutical giant, completed its 300,000-square-foot Edward M. Scolnick Research Center, making it the first Big Pharma company to establish an outpost among Boston's teaching hospitals. About the same time, the Massachusetts College of Pharmacy and Health Sciences opened a six-story, $93 million building with labs that open onto the street with full-height windows and four floors of student housing.

The most ambitious project slated for the area is a massive, two-part research facility totaling as much as 1.1 million square feet on adjacent parcels in Longwood. Lyme Properties LLC of Cambridge is preparing the site for construction, with occupancy slated for mid-2008. The second part may not get underway for four years, depending on the market for new lab space. Tenants at the project, called the Longwood North and Blackfan research centers, could include a mix of local hospitals, large pharmaceutical firms, and start-ups.

Nearby, Children's Hospital is almost done with the expansion of its main clinical building. That comes just two years after it built the Karp Family Research Laboratories, a 295,000-square-foot tower that houses the labs of Dr. Judah Folkman, the famed cancer fighter who has pioneered ways of defeating tumors by cutting off their blood supplies.

Is Longwood filling up? Not according to Rick Shea, vice president for facilities management at Dana-Farber Cancer Institute and former head of the Medical Academic and Scientific Community Organization Inc., a group that coordinates development of the Longwood area.

''There's no question that the buildings are getting taller, but there are still sites that are underdeveloped," said Shea. ''Every few years there seems to be an uptick in development, and we're in one of those now."

Indeed, Dana-Farber itself is creating a master plan and considering building additional lab space, Shea said.

Mayor Thomas M. Menino envisions a ''network" of life sciences development stretching from Longwood to Boston University's BioSquare lab and research complex in Roxbury to the South Boston Waterfront, where the city is seeking life science tenants in the Marine Industrial Park. Immunetics Inc., a maker of diagnostic test kits, recently moved from Cambridge to space on the waterfront.

''What I'd like to see happening is the Boston University development becoming the nucleus of a new life science area in the City of Boston that jumps over to the Marine Industrial Park," said Menino. ''The Longwood Medical Area may be the marquee location, but others see the same potential elsewhere. Affordable space and the opportunity for city loan programs gives companies incentives to locate outside the marquee area."

Longwood North and Blackfan could make it harder for Boston to lure biotech companies to outlying areas. Bob Green, chief operating officer of Lyme Properties, said he is working with institutions such as Beth Israel Deaconess Medical Center to create starter lab space for new companies built around hospital discoveries, much as East Cambridge is populated with companies with ties to the Massachusetts Institute of Technology. ''There hasn't been any of that in Longwood," said Green. ''This development could change that."

The lab and medical building boom comes at an unusual time in the real estate cycle. There is a glut of lab space in Cambridge, and little hope that empty buildings will soon be filled. More than 18 percent of the 6.2 million square feet of lab space in Cambridge available for lease is empty, said Mark J. Winters, executive director of Cushman & Wakefield, a real estate services company in Boston.

Part of the overhang was created when Vertex Pharmaceuticals Inc. backed off plans to move into 675 West Kendall St., a 290,000-square-foot building that is part of the larger development housing Genzyme Center. A Vertex spokesman said the company didn't need the lab space when it acquired another biotech company with an existing drug discovery center in San Diego. Vertex's lease for the space runs through 2018. It recently completed its first sublease of 45,000 square feet to Momenta Pharmaceuticals Inc.

Millennium Pharmaceuticals Inc. went through a big restructuring over the past 18 months and consolidated from 12 locations to six, leaving 180,000 square feet of vacant space at 640 Memorial Drive, the old Ford assembly plant that is owned by MIT, and additional space on Sidney Street.

Green said the market isn't as bad as the big vacancy rate would indicate. Much of the space is in small chunks, or is on high floors that are unsuitable for chemistry labs, he said, leaving companies looking for significant amounts of lab space with only a handful of options. ''In the next 12 months, we expect a significant portion of the vacancy will be leased," he said.

Winters noted that the lab vacancy rate in Cambridge had been 22.2 percent a year ago. ''It's trending in the right direction," he said.

From The Boston Globe

[Scott]

It's pretty ambitious to try to spread tech toward M. Cass area and eventually the Southie Waterfront. The Urban Ring might help with that.