Novartis, a Swiss biotech firm, reportedly had considered signing a large lease at the Boston Tech Center in Allston before setting its sights on Cambridge.
Providing additional fuel to the state’s booming biomedical sector, a Swiss-based pharmaceutical company is targeting Cambridge for more than 300,000 square feet of laboratory space, industry sources said last week.
Novartis AG reportedly took a long look at the former Casey & Hayes warehouse in Boston’s Allston neighborhood, but is now said to be concentrating the search in Cambridge. Among the properties in its scope, sources said, are a Kendall Square building owned by Amgen and Technology Square, a 1.15 million-square-foot complex that the Massachusetts Institute of Technology purchased last year for $278 million.
“It looks like they are headed for Cambridge,” said one industry source tracking the activity. The broker said Novartis could be in the market for upward of 400,000 square feet, but added the size of its requirement is flexible depending on the real estate opportunities available.
With the region’s office market in turmoil, especially for Cambridge, the biomedical industry has served as a welcomed source of demand during the past year. Some of the potential options in Cambridge were previously conceived for office space, but landlords are increasingly willing to adapt their properties to accommodate science-based users.
In its recent industry overview, Meredith & Grew estimated that Cambridge’s office market has an 18.3 percent vacancy rate and average rents of $35 to $42 per square foot. Biomedical space, by contrast, has nearly no vacancy and is averaging rents of $55 to $61 per square foot.
Currently, such Cambridge buildings as 300 Tech Square, 300 Third St. and 320 Bent St. are being adapted from telecom or office use to a biomedical function. That has freed up space of late, giving firms such as Novartis the ability to get a foothold in Cambridge.
Access in Allston
The trend is not good news across the river in Allston, where Cabot Cabot & Forbes, owner of the Boston Tech Center, appeared close to cementing a deal with Novartis before the tenant broke off talks. Calls to Cushman & Wakefield, which is representing Novartis, were not returned by Banker & Tradesman’s press deadline. Meredith & Grew broker William S. Zielinski, agent for CC&F’s building, declined comment on the matter.
“We don’t discuss anybody who is looking at our building until we have a deal,” said Zielinski, who is heading up the marketing effort with M&G Senior Vice President Joseph P. Flaherty. Despite that, sources insisted that there was a hard charge in recent weeks to complete a deal with Novartis, but ultimately, the firm decided to concentrate on Cambridge.
“It’s another kick in the teeth for those guys,” said one Boston broker of CC&F and its marketing team, adding of the Allston building, “They are going to struggle with that one for awhile.”
According to the broker, the Allston building has difficult access for companies, especially when there are viable options remaining in such core biotech markets as Cambridge. “Until all of the prime opportunities dry up, I just don’t know who is going to go in there,” said the source, who requested anonymity.
While declining to discuss any specific suitors, Zielinski insisted that the Boston Tech Center is drawing plenty of attention among biomedical companies. Originally designed for telecommunications companies until that market fell apart, the Allston facility has the weight-bearing floors, ceiling heights and electrical capacity to accommodate a biomedical tenant, said Zielinski. He said that more than 30 such companies have toured the property in the past six months.
“We’re happy with the activity,” Zielinski said. “We’d just like to get a deal done.”
It would not take much to kick the project off, said Zielinski, predicting that CC&F would move forward with repositioning the property if it could land a 100,000-square-foot tenant. The project is slated to deliver 440,000 square feet of space. Given that the former warehouse was halfway through the renovation when the telecommunications slump hit, Zielinski said a tenant could be occupying space as early as 10 months from the lease signing.
“Nobody can touch us with that timing,” he said.
CC&F scored a needed victory earlier this month when it received approvals to build a 650-vehicle garage at the property, most of which will be constructed underground. As a telecom facility, the building would have had only a handful of employees, but a biomedical use requires a substantial increase in parking.
Traffic in Allston has long been a concern for the neighborhood, and was a key selling point for residents in backing the telecom concept. But while it will result in a substantial hike in vehicles coming through the area, the biomedical use will not be as intrusive as an office building would be, Zielinski noted.
Work on the garage will not commence until a lease is signed, Zielinski said. With that element in place, he maintained that the neighborhood has again thrown its support behind the project, a notion seconded by Boston City Councilor Brian Honan, whose district includes Allston.
“They have worked very hard to do right by the community and put in a building and a parking plan that meets the concerns of the neighborhood, and I hope they will reap the benefits,” said Honan. And while he has not met with any prospective tenants, Honan said there are indications that CC&F is making progress.
“It’s absolutely going to happen,” he said.
