Space Race
With biotech laboratory space becoming scarce throughout Boston and Cambridge, Worcester and other Central Massachusetts locales should be ready to make themselves as attractive as possible to the companies and developers that could be looking west for the next biotech hotspot.
According to a recent market report published by Boston commercial real estate firm Richards, Barry, Joyce & Partners, tenants snatched up some 673,000 square feet of laboratory space in Greater Boston during the six months ended March 31. The leasing spree brought the vacancy rate for the area down from 14 percent to 9.7 percent.
It looks like the end of March may have been the end of the line for the leasing of available space in Greater Boston. RBJ explained that while demand remains high and availability is on the increase in the suburbs, the space coming onto the market (a lot of it on a sublease basis) isn’t particularly attractive to biotech tenants.
Looking West
The situation should have developers and other potential property owners running to available locations all over the suburbs, where land is relatively inexpensive and workforce education levels are nearly equal to those in Cambridge or Boston.
All of this may seem like the makings of an ideal trend. Biotech companies with their hearts set on Cambridge or Boston are beginning to realize that they don’t need vaccinations and a passport to travel west of Interstate 495.
Developers, investment groups and other property owners can provide Class A space at reasonable rates and include all the free parking their tenants could ever want at locations in Worcester, Devens, Westborough and other cities and towns counting on biotech for job creation and economic development.
Of course, the situation is more complex than that, and the state budget is threatening to drastically cut funding to key organizations, programs and initiatives that would help make a Central Massachusetts biotech building boom possible.
The Massachusetts Biomedical Initiative, a business incubator that provides start-up firms with low-cost lab space and other assistance, is facing drastic cuts to its state aid package.
Currently, MBI helps support 21 fledgling biotech companies in Worcester. For the current fiscal year, MBI received $700,000 in state aid. However, the state Senate has proposed cutting that amount to $300,000 for the coming year.
The legislature has also planned cuts in investment of the Massachusetts Life Sciences Center’s $1 billion in tax credits and loans to $10 million in the coming year from $25 million as originally planned and $15 million as ordered by Gov. Deval Patrick as part of an earlier cutback plan.
Funding reductions like these threaten to cut off at the knees one of the only industries in the state that can be said to be growing during the current recession.
The Massachusetts Life Sciences Center has provided almost $3.5 million to companies ready to make the treacherous leap from being incubated in their early stages by organizations like MBI to commercialization of their products and establishment of headquarters and manufacturing facilities of their own.
These cuts not only keep new biotech companies, for which timing is critical, in gestation for far too long, but signal to those companies and to the developers and property investors that Massachusetts is unwilling to shoulder enough of the risk associated with its desire to establish a nationally-recognized biotech cluster.
If the state waits for the economy to show signs of significant improvement before fully funding MBI and distributing the full amount of its $1 billion life sciences fund scheduled for the coming years, promising biotech firms will die on the vine.
Developers, investors and companies just now turning their serious attention toward Central Massachusetts as a place for significant biotech property development will be left to look at a half-empty pipeline of would-be tenants.
At worst, companies ready to make the leap to office and lab space of their own won’t simply disregard Central Massachusetts for its lack of available space, they will leave Massachusetts altogether, and that’s a risk the state can’t afford to take.
WBJ Web Partners
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