LMP Hits Pause on Somerville Lab Project

Image courtesy of SGA

A third major Somerville lab development is hitting the brakes amid the growing glut of life science space in the city.

Leggat McCall Properties and DLJ Real Estate Capital Partners began site work in 2022 on the 9-story, 262,000 square foot lab building at 15 McGrath Highway after receiving a $230 million construction loan from Oxford Properties Group.

“Due to the dramatic slowdown in regional lab demand, ownership has decided to pause construction of 15 McGrath until market conditions improve,” Leggat McCall Properties said in a statement issued today.

Discharges and releases of the mortgage were filed June 11 at the Middlesex South Registry of Deeds.

Two other developers recently delayed groundbreaking of major lab projects in Assembly Square because of the supply-demand mismatch in life science space.

Federal Realty Investment Trust requested a two-year extension of its permits for a 381,529-square-foot lab building at 350 Assembly Row, while DivcoWest sought an extension for its 590,000-square-foot project at 120-132 Middlesex Ave.

Two other spec lab developments are nearing completion at BioMed Realty’s Assembly Innovation Park and Greystar’s 74M tower without announced tenant commitments. 

Somerville Executive Director of Strategic Planning and Community Development Thomas Galligani cited 15 McGrath Highway’s pause as an example of the city’s steep downturn in both commercial and multifamily development.

“It’s just a hole in the ground right now that would have generated $3 to $4 million in new tax revenues every year, and another $3 million plus in new housing linkage fees,” Galligani said in a May 23 presentation to the Somerville City Council.

Lab vacancies in the 5.5 million-square-foot inner suburban submarket, which includes Somerville, hit 41.5 percent in the first quarter, according to research by brokerage Colliers.

One other previously-approved Somerville life science project is seeking approval of a variance to complete its permitting.

The 35 McGrath Highway project was approved by the Zoning Board of Appeals in May 2022, but was instructed by the inspectional services department this year to obtain an additional curb setback variance, according to application materials submitted to the board.

The DeNunzio Group of Salem proposes a 9-story, 135,000-square-foot lab building on the 0.47-acre site between McGrath Highway and the Somerville Community Path.