After Kendall Square Success, Alexandria Real Estate Equities Aims to Create Another Biotech Mecca in Massachusetts
August 19, 2016
By Mark Terry, BioSpace.com Breaking News Staff
In the U.S., the two hottest locations for biotech startups are Cambridge, Massachusetts and the San Francisco Bay Area. Generally speaking, the reason is proximity to major research institutions and universities, and interested venture capital. But at least in the case of the Boston area, the growth hasn’t just been a happy conjunction of academia and venture firms. Developer Alexandria Real Estate Equities has worked to make it happen.
Ten years ago in July, Alexandria acquired seven buildings in Kendall Square for $600 million from the Massachusetts Institute of Technology. The area was 1.2 million square feet, about 20 percent of Alexandria’s total properties in the Boston area. And since then, it has become the site of numerous biotech startups and their research facilities, with companies like Epizyme and Moderna, just to name only two of many, locating there. And big pharma has chosen to set offices and research facilities there as well.
In an interview with the Boston Business Journal, Alexandria’s executive vice president in charge of the greater Boston region, Tom Andrews, said that its plans to buy Technology Square came about five years after it entered the Boston market. Alexandria is based in California. He said the company had observed the paradigm shift in the pharmaceutical industry from big chemical-based drug companies, typically headquartered in New Jersey and Philadelphia, into biologically-based startups.
“One thing we observed,” Andrews said, “was the desire for collaboration between life science firms, both large and small, and academia.”
Alexandria is doubling down on the success of Technology Square. In April, it spent $310 million for new office development that will have Bristol-Myers Squibb as its anchor tenant. It will be part of the Alexandria Center at Kendall Square. Other tenants in the campus include bluebird bio and Sanofi Genzyme .
It’s also coughed up $725 million of One Kendall Square, another seven-building campus nearby with 644,771 square feet of office, lab and retail space. It also has a site under development at 399 Binney Street, where it plans to have a four-story building with 163,000 square feet of space.
“We really thought that the opportunity to acquire another campus in the heart of Kendall Square was too good to pass up,” Andrews told the Boston Business Journal. “One of the things we really like about it is the base of amenities is really cool.”
Properties lease in Kendall Square for about $70 per square foot, but many developers, biotech entrepreneurs and executives argue that the access to research-and-development talent is worth it. They not only find it easier to recruit top talent, but it gives easier access to clinical studies and developing partnerships between companies, simply because you’re able to walk to a nearby restaurant and chat over breakfast, lunch or a drink.
Other developers, however, think there should be a more affordable alternative, and undoubtedly some startups and execs must think that their precious startup dollars might be better spent on research than on infrastructure. King Street Properties, which also focuses on real estate development for science markets in the Boston area, is looking more closely at Lexington, Mass. This spring it dropped $46 million on a 91,000-square-foot property in Lexington, with the idea that life science companies might be just as happy in the suburbs without the costs of being right in the city.