Boston-Area Lab Leasing Hits Post-Pandemic Low

101 Smith Place/Image courtesy The Davis Cos.

Lab leasing in Greater Boston declined to the lowest level since the pandemic as life science companies shied away from real estate commitments in a frugal funding climate. 

The 505,000 square feet of lab space leased in the second quarter was the lowest total since the same period in 2020, CBRE reported. The brokerage is tracking 72 tenant requirements for 1.9 million square feet, more than 80 percent by companies seeking 25,000 square feet or less.

The meager tenant demand indicates challenges for developers seeking anchor tenants for a series of major lab projects nearing completion in Boston and Somerville.

To spur leasing activity, developers including The Davis Cos. have been building out speculative suites in new projects.

At 101 Smith Place in Cambridge, battery manufacturer Samsung SDI signed a 10-year lease for 13,604 square feet at the building in a spec suite that is scheduled for completion in December.

Core-and-shell construction of the 161,616-square-foot building, located in The Davis Cos.’ Quad Life Science campus in West Cambridge, was completed in June. Three additional spec suites are available, according to The Davis Cos.

Three major lab developments in Somerville have been delayed in recent months by the glut of life science space in Greater Boston. Leggat McCall Properties paused work on the 15 McGrath Highway project after demolishing a commercial building anchored by Sav-Mor liquors and beginning site work for the 9-story, 262,000 square foot lab building.

Developers of two other East Somerville projects, Federal Realty Investment Trust and BioMed Realty, this spring sought extensions of permits for previously-approved projects totaling 381,529 and 590,000 square feet respectively. The inner suburban north market now has a nearly 71 percent availability rate in 10 buildings totaling 2.8 million square feet, according to CBRE.

Lincoln Property Co. previously delayed its Seaport Circle lab tower and renegotiated its ground lease with property owner Massport.

The region-wide construction pipeline has shrunk to 8.1 million square feet after peaking at over 17 million square feet in mid-2023.

Vacancies in the 20 million-square-foot suburban lab market ended the second quarter at 19.8 percent.

Established suburban life science markets in Waltham and Lexington are faring comparatively better. Vacancies in the 7.5 million-square-foot Lexington-Waltham submarket declined 0.8 percent to 13.4 percent following leases by Novo Nordisk at 65 Hayden Ave. in Lexington and Moderna at 211 Second Ave. in Waltham.