Lab Space Underway at Arsenal Yards is On Spec
Posted By: Boston City Properties
As construction begins on a significant new lab building at Arsenal Yards, Watertown is at the precipice of becoming Greater Boston's newest and most significant life science hotspot. In mid-January, construction of the laboratory building commenced on spec, meaning that no tenants have been leased for the property – a clear sign that developers aren't worried about filling the space quickly. Why should they be? In a year plagued by the coronavirus pandemic, the life science market has been a real bright spot in the region, and Class A lab space is in higher demand than ever.
The underway project, which is tentatively being called 100 Forge, will consist of a nine-story, all-glass building offering 165,000 square feet of laboratory and life science space. The developer, Boylston Properties, partnered with JP Morgan Asset Management's institutional investors to line up capital for the project, which is being financed through a $100 million construction loan from Arkansas-based Bank OZK. Designed by Ayers Saint Gross, the highly anticipated new building will be situated in the heart of Arsenal Yards, the major mixed-use project that is slated for completion by the end of 2021. Construction of 100 Forge is expected to be complete sometime in the summer of 2022.
Situated on the East End of Watertown, Arsenal Yards is a highly anticipated mixed-use development that is poised to transform this part of the city. Another Boylston Properties project, Arsenal Yards will feature more than 50 high-end retailers and restaurants. The development will also have a Majestic 7 Cinema, a Roche Brothers grocery store, 300 apartment homes and a 146-room Hampton Inn and Suites by Hilton hotel. These and other amenities are certain to make the development more attractive to drug companies and other biotech firms – especially those that are being edged out of hotspots like Kendall Square.
Watertown is emerging as a big success story in the post-pandemic world, and 100 Forge is just the latest proof. Another building at the Arsenal Yards campus, located at 200 Arsenal Yards Boulevard, has already attracted three other life science companies to the neighborhood; two of them vacated space at Kendall Square for larger digs at Arsenal Yards. The three companies, SQZ Biotechnologies, Arkuda Therapeutics and Kymera Therapeutics, are already setting up shop in the 108,000 square-foot building. They are sure to be joined by other biotech firms at the new development quickly.
Including construction projects that are currently underway, lab space in Watertown has grown by 256% over where inventory levels stood at the end of 2016. Leasing activity is vigorous as well, and prices are rising steadily. In 2017, it cost an average of $40.65 per square foot, NNN, to lease lab space in Watertown. Since May 2019, the average rent paid has risen to around $75.75 per square foot. Although lots of new life science space is under development in Watertown, much of it is already pre-leased – and on-spec projects like 100 Forge are sure to fill up fast.
Many life science developers have set their sights on Watertown lately. In late 2019, Alexandria Real Estate Equities bought Athenahealth's 29-acre Arsenal on the Charles campus – located just up the road from Arsenal Yards – for $525 million. The firm plans to redevelop portions of the campus to bring it up to speed with current life science standards. In July, the company also bought the Mount Auburn Club; an extensive life science development is being planned for the site, adding yet another option for firms that are running out of luck in Cambridge and the Seaport.
Currently, more than 25 biotech firms operate out of Watertown. With the addition of 100 Forge and other life science developments around the area, the city is undergoing a clustering effect that should put it in direct competition with Kendall Square and other life science hubs across Greater Boston. Watertown has a lot to offer life science firms, including a prime location just one mile from Allston-Brighton, two miles from Harvard, four miles from MIT and six miles from downtown Boston. Arsenal Yards is expected to be completed by the end of the year, and 100 Forge should be finished by the summer of 2021.