Innovation is the holy grail, and we have an embarrassment of riches
By: Matthew Powers, EVP, Life Science, JLL & Don Domoretsky, EVP, Life Science, JLL
Five years ago the Greater Boston life science market looked very different, in some ways, than it does today. But in other ways, it was very much the same. That is to say, the industry went through a cycle of M&A activity, which we’re once again experiencing. What has changed during that time though has been the early stages of a vertical integration of the industry as well as the way people work and the way companies think about and build out space. Technology has impacted the ratio of lab space to office space in favor of the office component, and there’s now more technology in labs than ever before. But perhaps most importantly, over the past five years the innovation has grown and migrated to new areas.
Innovation is a word that has been thrown around a lot here lately, but there’s a reason for it. The Greater Boston area is distinguished as a hub of innovation. In fact, Massachusetts was recently ranked as the #1 most innovative state in America by Bloomberg Business, and innovation is largely what led the area to reach #2 in the nation and #5 globally in JLL’s latest City Momentum Index.
It’s all due in part to our unique ecosystem, which combines academia, healthcare, entrepreneurs, venture capital, and industry inertia in a way that no other city does. And while many other areas are trying to replicate what we have here, they’re finding it challenging to do so. That’s because if you’re missing just one of the pieces to the puzzle, it becomes very difficult to re-create. Some cities are trying though. Our biggest competition at the moment is coming from San Diego and San Francisco, and there’s an impressive effort being assembled in NYC to develop a thriving life science cluster.
But we still think no matter what they do they’ll have a tough time competing with us. The life science cluster established in Cambridge, and in particular Kendall Square, is unlike anything else in the world, which is why demand is sky-high. But with supply constrained, companies are increasingly considering creative options which did not exist five years ago, or migrating to more available and less expensive suburban and micro-markets. Lexington, Waltham, Watertown and Boston have thus far been the first alternatives to Cambridge, but future opportunities lie in the Volpe Center project as well as the burgeoning markets surrounding the Cambridge hub.
Speaking of Lexington, King Street Properties recently broke ground on the largest ever spec lab development in the suburbs at 115 Hartwell Avenue. While risky, this was the right decision and one that is likely to signal a larger trend as Lexington begins to parallel Cambridge. In the coming years, we expect new creation in this market to be both opportune and challenging.
Which leads us to a common question: how long can it all last? People have been talking about the Cambridge bubble for over 20 years. But what they’re overlooking is the fact that we have a mature, thriving cluster, founded on innovation now in its fifth generation of industry cycles, one that has become quite immune to major changes and shifts in the marketplace. From where we’re sitting, we see a very strong cluster continuing into the foreseeable future.