Changing Winds for Life Sciences Occupiers
The anticipated economic downturn and shifting funding environment are changing the landscape of the life sciences industry in Greater Boston. The recent surge in sublease availability suggests that organizations may be downsizing or relocating altogether to prepare for an uncertain future. As of early October, the life sciences sublease market totaled over one million square feet, with 790,000 of that having come online since the close of Q2. Much of this availability sits in Cambridge, the heart of the life sciences market.
With demand beginning to slow and many planned developments and office-to-lab conversions getting closer to delivery, life sciences occupiers may gain a competitive edge in the market for the first time in decades. The amount of lab and office space currently on the sublease (and direct deal) market should allow occupiers to be more patient with their site selection and negotiate favorable lease terms, including free rent, lease flexibility, and tenant improvement packages. This is not to say that lease rates are dropping, but we anticipate landlords will be willing to make more concessions than we’ve seen in the past two years to get a deal done.
Looking ahead, occupiers should keep a close eye on the development pipeline for both the R&D and the manufacturing of their product. Knowing the landscape of the types and geography of new facilities being developed is critical for effective long-term planning. Additionally, life sciences organizations should engage a market expert to understand the competitive advantages they may have (and how to leverage them) and the optimal timeline for real estate decisions. Reach out to one of Cresa’s advisors to learn more.