Saturday, May 31, 2008

Starting to add up to some real money

Last week's Globe carried an item that a real estate firm is planning a 5-year, $1 billion dollar, 1.5M square foot biotech complex in Cambridge. Given all the recent news about Gov. Patrick's $1 billion biotech initiative, perhaps Sen Dirksen was right. Predictably, one letter to the editor proposed that the private money obviates the need for the public mone.

Of course, they're addressing two different things, well, mostly. The original biotech proposal was going to be heavily research oriented, but now there is the earmarks for education & earmarks for local infrastructure. The real estate development is going to provide space for future growth, space that the company is hoping will exist.

Real estate in general & biotech specifically are a boom-and-bust phenomenon in Cambridge, though the trend is clearly weighted a bit towards boom. Even before the genomics boom there was a shortage of space & all sorts of old factory space was converted -- one MLNM site was known as the "Box Factory", as it had previously manufactured heart-shaped candy boxes for Valentine's Day. New buildings went up, such as the cluster of current & former MLNM buildings and the Cambridge beachhead for Partners Healthcare's research empire. The really big daddy's were the conversion of a candy factory to the Novartis site & Genzyme's beautiful building. When the tech boom crashed, space intended for companies such as Akamai was hastily converted.

Then the genomics era came crashing down, and suddenly MLNM wasn't gobbling up space but instead dumping it. Sites such as 640 Memorial Drive sat largely vacant, along with many smaller ones. Signs for 'Biotech Space Available'.

The pendulum is apparently closer to boom again, and several biotechs are heading to the suburbs for cheaper rents or more space. Cambridge will never be cheap, that's for sure.

A billion dollars is no pocket change. One unintentionally humorous element in the story was that no clients had been lined up yet -- like anybody in this business can plan 5 years ahead! MLNM got burnt multiple times on shorter term planning -- stuck in a long lease at 640, buildings configured for the wrong mix of chemistry & biology labs, etc.

Biotech buildings have all sorts of additional requirements, many of which I've only recently become aware of. Heavy-duty floors are needed to support equipment. Complicated ventilation infrastructure. Systems to pH neutralize waste water. Some companies have systems to move waste solvents downstairs; Cambridge's fire department has strict limits which grow tighter the higher the floor. Trying to get leeway there is a non-starter; a year and a half ago a non-biotech solvent explosion blew apart a neighborhood in a town north of Boston.

The location is very good; close to a lot of existing biotech, major road routes, and two mass transit lines -- one of which will probably be extended by the middle of the next decade. The area is already congested, but where isn't?

In the image, the Charles River is the dark slash in the lower right corner, and the Genzyme building anchors the lower left corner.
View Larger Map The big parking lot in the center would be a key site, and has begged for redevelopment for a while. The parking lot above it and to the right would also be included -- but also the low rise buildings going diagonally up to the upper left. These are apparently currently low-rent startup space, a useful commodity, but the new buildings will be much taller -- critical in the increasingly crowded biotech zone. A little bit of the space will be restaurant/retail, but with Kendall Square & the Cambridge Galleria nearby, it won't be lacking for eating & errands.

1 comment:

Anonymous said...

I work on the far end of Vassar Street, near the Hyatt Hotel. It's pretty distant from the amenities of Central Square and Kendall Square, but we like the building we're in. We order a lot of lunch from Dimitrio's and drink (expensive) beer at the Hyatt after work.

There's quite a lot of vacant space in the area, including 640 Memorial Drive. I have also noticed a lot of newly vacant space on Sidney Street, including at least one building formerly occupied by Millennium. So there's space for new start-ups in the area, and maybe rents will fall.

With the price of gasoline rising towards four dollars a gallon, many people prefer to work close to Kendall Square, which is well served by the red line. I realize that moving to the suburbs (Waltham, Woburn) is cheaper for companies, but it makes commuting more difficult and expensive for employees. So I welcome the expansion of biotech space near Kendall Square.