Now many of those buildings are nearing completion, and opening empty, into a very different world for the life-science industry. Investment has slowed. Cuts are more common than hiring sprees. And there’s more lab space on the market than there has been in decades — a costly reminder that economic forces often move faster than construction timelines.
To be sure, Greater Boston remains a global epicenter of the life-science industry, and developers and drug companies alike remain bullish on its long-term prospects here. But the sudden, massive overhang of supply — even as more lab buildings rise from the dirt — threatens to quickly cool one of the last remaining hot spots of Boston’s long-running building boom.
“A lot of new construction is going to have a very, very hard time getting leased,” said Mark Winters, a veteran life-science real estate expert and vice chairman with the brokerage Newmark.
In just two years, the amount of lab space in Greater Boston has ballooned by 57 percent, according to research from real estate brokerage firm Colliers, with nearly 18 million square feet of new space opening from the Seaport to Worcester. For comparison, that is nine times as much as opened between 2019 and 2021. Lab now accounts for more than one-fifth of all office and life-science space in Eastern Massachusetts.
Why did we build so much, so fast?
“People were chasing that pot of gold at the end of the COVID life-sciences rainbow,” said Bob Coughlin, managing director for life sciences at the brokerage JLL.
Flash back to early 2021. Office towers were largely empty. Hotel visits had plummeted. But researchers at drug labs were still coming in to conduct work that’s impossible to do from home — much of it dedicated to tackling COVID and other life-altering diseases.
Investors took notice. In 2021, biopharma companies in Massachusetts received a staggering $13.7 billion in venture capital funding, up 70 percent from 2020, according to the Massachusetts Biotechnology Council, an industry trade group.
The companies getting that funding would need homes, and real estate investors saw life-science space as a growth area. Money flowed in. One example: In early 2016, investment behemoth Blackstone spent $8 billion to acquire life-science developer BioMed; by late 2020, a new investment deal valued the company at nearly twice that much: $14.6 billion.
Even developers who’d never built lab space before were eager to get into the game, and before long, warehouses, old office buildings, even shopping malls were being proposed for redevelopment into lab space. Communities like Somerville, Watertown, and Waltham, eager to build their tax base, happily signed off. Somerville alone approved more than 600,000 square feet of life-science projects, and has 2 million more square feet due to come online within the next year or so.
But things have changed. Venture capital funding for biopharma has dropped by nearly $6 billion — around 44 percent — since 2021. Companies that used to lease more space than they’d need in anticipation of future growth are now holding their purse strings tighter. Tenants have more options, and need less space than just a few years ago.
“If you are a tenant, it’s a good time to be in the market,” said Jeff Myers, director of research at Colliers. “You’re not forced to wait years for builds to be delivered. . . . Now you have choices that are readily available.”
It’s not just Boston facing a slowdown. Lab vacancy rates have also surged in other major life-science markets such as San Francisco and Seattle.
Of course, there are some big projects that will open fully leased, like Moderna’s new headquarters, the US hub for Takeda Pharmaceuticals, and a new AstraZeneca research facility, all under construction in Kendall Square. But for each of those there’s…
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