A Tale of Two Markets: Cambridge's Evolving Identity
With a prime location and unmatched access to universities and talent, the Cambridge real estate market has long been renowned for its competitive nature and dynamic evolution. In recent years, the commercial real estate landscape has been a tale of two markets: the life sciences world and the technology/office users. In Cambridge, these two groups are inextricably linked: the ebbs and flows of one market often create a reactionary ripple in the other as they, in more recent years, have competed for space in the highly concentrated Kendall Square.
As the early trends of 2023 take shape, many are eyeing Cambridge to see how landlords and space occupiers move forward in a cautious, potentially correcting year. Based on data and findings from Cresa’s recently published 2023 Market Insight Reports, here’s a snapshot of the two markets that control the lion’s share of Cambridge real estate.
Life Sciences Users
The latter half of 2022 saw a pullback in the explosive life sciences funding and activity that helped drive the Greater Boston real estate market for several years. Now that many companies have made commitments and financial markets have tightened, demand is down from its 2020 peak. We’ve seen a significant increase in sublease availabilities as many companies scale back expansion plans and look to reduce overhead. At the same time, many life sciences developments and office building conversions are scheduled to deliver in the next two years, which should provide ample options and leverage for life sciences users looking for top-quality, purpose-built space.
Across the Cambridge office market, subleases abound while demand remains low. Throughout the pandemic, office demand was minimal, but the life sciences market claimed much of the available space for administrative or conversion purposes, thus propping up the struggling office market. Now, as life sciences demand relents, demand from true office users should illustrate a more accurate state of the office market. As widespread layoffs headline big tech news, office users looking for space should have plenty of quality options to consider.
As the markets fluctuate amid an uncertain economic outlook, space occupiers are regaining some long-awaited leverage in one of the countries tightest markets. Companies looking to relocate to Cambridge should do their due diligence: right-sizing exercises, workplace strategy analyses and headcount projections are more important than ever to identify the optimal space for your organization. To find expert predictions and recommendations for the year ahead, download Cresa’s Market Insight Reports here.