Assembly Row Developer Delays Big Lab Project

Image courtesy of Jacobs

Federal Realty Investment Trust is delaying groundbreaking of a life science project at Somerville’s Assembly Row, citing “oversaturation” in the lab development market.

A special permit for the 381,529-square-foot lab building at 350 Assembly Row is set to expire this week.

Two other major lab developments are nearing completion at BioMed Realty’s Assembly Innovation Park And Greystar’s 74M tower without any announced tenant commitments. Another developer, DivcoWest, last month sought a two-year extension for permits of its 19-story, 596,000-square-foot tower at 120-132 Middlesex Ave.

In 2022, Federal Realty proposed the lab building for its 1.3-acre 7A block in the mixed-use Assembly Square development, replacing parking and amenity space.

The upsurge in East Somerville lab development began as interest rate hikes began to curtail venture capital investment in the life science industry and drive up borrowing costs for developers.

Federal Realty is seeking a two-year extension of the special permit.

“The applicant has faced hardship in pursuing the project in the form of difficulties associated with the rise in interest rates, increase in construction costs, and an oversaturation of lab product in the region,” currently making the project financially infeasible, Federal Realty Senior Director of Development Sarah Rogers wrote in a submission to the Somerville Planning Board.

Greater Boston lab vacancies topped 20 percent for the first time in two decades, brokerage JLL recently reported, ending the first quarter at 23.8 percent as 1.8 million square feet of vacant space was delivered to the market.

Another emerging Somerville lab cluster near Union Square has had recent success attracting tenants. North River Leerink’s 100 Chestnut St. project is 90 percent leased following commitments from ADA Forsyth Institute, Charles River Accelerator and Development Lab and incubator Nest.bio.