Real Estate Firm Building the "Next Kendall Square"
October 27, 2015
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – King Street Properties is banking $46 million on a new 91,000 square-foot structure that pharmaceutical companies seeking space in the Boston suburbs will look for cheaper accommodations than the limited options in Cambridge’s Kendall Square.
The developers believe Lexington, Mass. can be the next Kendall Square in terms of attractiveness for pharmaceutical companies and are planning to build the new 91,000-square-foot building, the Boston Business Journal reported this morning. Although there are no tenants scheduled for the building, the development company is banking on the explosive growth in life sciences the Boston area has seen over the past few years. Lexington is currently the home for Irish-based Shire Pharmaceuticals , which has approximately 2,000 employees at its U.S. headquarters. King Street is hoping the greater availability and cheaper rent will be attractive to the life sciences industry. King Street currently oversees about 800,000 square feet of space suitable for the biotech industry, including space in Cambridge that it leases to Amgen and Celgene Corporation , the Journal noted.
Rent in the planned Lexington building, which King Street hopes will be completed in 2016, will be about $45 per square foot. The Kendall Square properties lease for about $70 per square foot, which is not inexpensive. But, the proximity to the research and development talent in the area is a bonus that must be factored into the bottom line.
One of King Street’s biggest competitors is BioMed Realty Trust, which rebranded almost 350,000 square feet of former Vertex Pharmaceuticals space over three buildings in Boston as the Sidney Research Campus. Vertex vacated the space in 2013 when it moved a few miles into Boston. In May, Bill Kane, BioMed’s vice president, told the Boston Business Journal that smaller biotech companies are finding it difficult to acquire space that meets their needs. Out of the 36 companies seeking lab space in Cambridge, 28 company officials said they were looking for “80,000 square feet of space or less.” BioMed is converting some of the space to “universal flex labs” which will be able to expand to meet the demands of the biotech companies as they grow.
The new Sidney Research Campus facility already has its first tenant lined up. RaNA Therapeutics, Inc., a 25-employee preclinical biotech headed by Ron Renaud, the former CEO of Idenix Pharmaceuticals, Inc. , will move in September, the Journal reported. More tenants are expected to be announced later this year. In 2013 RaNa inked a deal with Denmark-based Santaris Pharma A/S to use Santaris’ Locked Nucleic Acid (LNA) technology to develop RNA-targeted medicines.
As Kendall Square space continues to come at a premium, King Street Properties, which bills itself as the operator of the largest “privately-held portfolio of science-based real estate concentrated within the core science submarkets of Boston,” believes more and more companies will look at properties elsewhere, including Lexington. In an earlier report, the Boston Business Journal reported the bulk of the Kendall Square properties are “100 percent leased,” following Boston Properties leasing an additional 50,000 square feet of space to Google Inc., adding onto the Internet company’s already expansive 300,000 square feet of property. Boston Properties controls nearly three million square feet of space in Kendall Square.
Cambridge’s Kendall Square area, which makes up approximately one square mile, is packed with biotech representatives. In May Indianapolis-based Eli Lilly and Company (LLY) announced it will build a new drug delivery and device innovation center, the Lilly Cambridge Innovation Center, in Kendall Square.
In April, Amgen (AMGN), headquartered in Thousand Oaks, Calif., announced it was going to expand its presence in its Cambridge facilities, as well as in South San Francisco, part of a 100-person staff expansion.
One of the reasons for the greater Boston area becoming such a major hub in the biotech and pharmaceutical industries is the plethora of research universities in the area. Boston also has one of the highest educated workforces in the nation. Not only are smaller companies calling the Boston area home, but many larger and established pharmaceutical companies, such as GlaxoSmithKline , Takeda Pharmaceuticals , Sanofi , Biogen Idec, Inc. and Novartis AG have presences in the city. The close proximity of so many pharmaceutical and university laboratories provides researchers and scientists easy access to clinical studies and building partnerships between companies.