Skip to main content
Premium Trial:

Request an Annual Quote

Builder Seeks First Lease on 590K-Sq.-Ft. Life-Sci Campus Set to Rise in Boston ‘Burb

Premium
The developer of a planned office/research campus in Burlington, Mass., is looking to sign its first life-science leases by tapping into growing demand for R&D space in suburban Boston.
 
The Gutierrez Company is seeking a single tenant to lease at least 80,000 to 100,000 square feet before it breaks ground on the roughly 200,000-square-foot first phase of its Burlington Research Center, located about 16 miles northwest of Boston.
 
When completed, the biocampus, whose cost is still undetermined, will consist of three buildings totaling 590,000 square feet within a 15.6-acre property that was previously occupied by the defense contractor M/A-COM until corporate parent Tyco Electronics consolidated it with other units 14.5 miles north of Burlington in Lowell.
 
Gutierrez is marketing the project to potential tenants seeking large blocks of space, following recent approvals by Burlington officials. In July, the town planning board ended about two years of reviews by approving a series of special permits for the project, in addition to earlier rezoning and environmental approvals. One of those permits will allow on the site “laboratories engaged in research [and] development, experimental and testing activities including, but not limited to, the fields of biology, chemistry, biotechnology, pharmaceuticals, life sciences, biomedical devices, nanotechnology, electronics, engineering, geology, medicine and physics.”
 
The campus can accommodate tenants in both the life sciences and other tech specialties. How soon construction starts, and whether life-sci or other technologies dominate the tenant roster, will depend on market demand, Scott Weiss, managing director of commercial development with Gutierrez, told BioRegion News.
 
Life-sci space “will probably be primarily R&D,” though accommodating manufacturing uses will depend on the needs of potential tenants, he added.
 
Even with a slowdown evident in the overall commercial real estate market, Weiss said “there still seems to be some life-sciences activity in the area. We just think we have one of the best located sites for any biotech, life sciences, or office space in the market.”
 
Weiss said the cost of the project had yet to be finalized.
 
Headquartered in Burlington, Gutierrez owns and manages more than 4 million square feet of commercial space among the roughly 10 million it has built since 1978; the remainder is controlled by companies that acquired build-to-suit space. The developer has built some 10 million square feet of commercial space in the Greater Boston and southern New Hampshire regions.
 
Gutierrez has begun marketing its campus to potential life-sci and tech tenants through the project’s exclusive leasing agent, the Boston commercial real-estate firm Richards Barry Joyce & Partners. How much space will go to life-sci tenants will be “entirely market driven,” Jon Varholak, a partner with RBJ, told BRN.
 
Asking rent at Burlington Research Center will be “in the low $40s [per square foot] on a net basis,” Varholak said, in keeping with the suburban sub-market, plus an allowance of between $125 and $150 per square foot toward tenant improvements.
 
Weiss said that first building would likely take 18 months to complete once construction started. “We certainly could build on spec,” he said. “At the moment, we have no plans to do that, though that, too, could change.”
 

“The impact of big pharma in East Cambridge has tightened the supply dramatically, and therefore has … chased [out to the suburbs] not only other big pharma, but what I’d call Series B pre-IPO companies and other home-grown biotechs.”

Construction would be phased, with each building breaking ground as anchor tenants sign leases.
 
“We could kick off a 200,000-square-foot building with an anchor tenant in the 80,000- to 100,000-square-foot range. But to go completely speculative for a biotech user, it’s not on Gutierrez’ agenda,” Varholak said.
 
“The site is a built-to-suit option for large life-science users, or high-tech corporate America-type users. It’s a hybrid of a site,” said Varholak, who is teaming up with Ron Friedman, an RBJ vice president, to market Burlington Research Center. “We’re excited about the prospect of a biotech or big pharma-type use because of the migration of a lot of demand out of Cambridge.”
 
That migration, Varholak said, reflects in part the fact that rents remain lower in suburbs like Burlington than Cambridge, largely due to a dearth of life-sci space for smaller and medium-sized companies in Cambridge as pharmaceutical giants like Novartis and Schering Plough continue to expand into larger facilities in the home city of Harvard and MIT.
 
Novartis last week opened its third facility in Cambridge, the 80,000-square-foot Research Center of Excellence in Virology.
 
Like Gutierrez, hoping to fill the space gap is Alexandria Real Estate Equities, the publicly traded, Pasadena, Calif,-based real estate investment trust that on Sept. 17 plans to unveil a revised version of its planned East Cambridge life-sci campus. Alexandria hopes its plan will satisfy city officials, a residents group critical of the project, and individual residents who complained at public meetings earlier this year that the project was too large for the neighborhood.
 
“The impact of big pharma in East Cambridge has tightened the supply dramatically, and therefore has … chased [out to the suburbs] not only other big pharma, but what I’d call Series B pre-IPO companies and other home-grown biotechs,” Varholak said.
 
Over the past two years, several life-sci businesses have bolted Cambridge for its suburbs:
  • Shire plans a $394 million expansion in Lexington, northwest of Cambridge, that would more than double the Massachusetts workforce of its Shire Human Genetic Therapies unit over the next eight years by adding 680 staffers to the 675 individuals it now employs in the state. Shire plans to fill more than a half-million square feet of lab and office space at Lexington Technology Park by renovating a 125,000-square-foot facility, and building two additional structures on development pads, including a 200,000-square-foot and 170,000-square-foot space
  • Bristol-Myers Squibb, which is transforming 89 acres in Groton once occupied by the barracks of former US Army base Fort Devens into a $750 million, 400,000-square-foot biologics-manufacturing plant now under construction. BMS projects the new facility, located northwest of Cambridge, will employ 350 people when it is completed in 2010. In return, the company won $60 million in state and local incentives;
  • EMD Serono, which has announced a $50 million, 125,000-square-foot expansion of its 85,000-square-foot research site in Billerica, northwest of Burlington. The expansion is expected to account for half the 200-person job growth that the US affiliate of Geneva-based Merck Serono expects to yield in Massachusetts through 2012.
  • Altus Pharmaceuticals, which plans to move and consolidate operations from 125,000 square feet in three Cambridge sites during the third quarter after signing a 10-year lease last year for 168,736 square feet within two buildings in Waltham to the west. The maker of protein therapeutics for patients with chronic gastrointestinal and metabolic diseases would occupy an 83,000-square-foot office building and an 85,000-square-foot lab building in the city. In 2006, Altus came close to a deal for expansion space at Patriot’s Lexington Technology Park; and
  • ImmunoGen, a developer of anti-cancer drugs, which has already relocated its headquarters from Cambridge to Waltham, where it signed a lease for 88,930 square feet of space at 830 Winter St.
“Burlington’s looking at neighboring Lexington, Waltham, and Bedford, and seeing that they have been able to secure more jobs due to the biotech and pharmaceutical sector, and they’re saying, ‘Hey, we should be definitely entertaining this, as the supply of developable sites on [Rte.] 128 continues to shrink,’” Varholak said.
 
According to bioSTATus – Greater Boston Summer 2008, a life-sci market study prepared by RBJ and released in May, the vacancy rate for all of the suburbs outside Boston and Cambridge stood at 16.4 percent of the sub-region’s available 4.4 million square feet for the six months ending March 31. Varholak said the “128 North” submarket, which includes Burlington and surrounding towns, had a first-quarter vacancy rate of 8.4 percent of the available 987,000 square feet of lab space.
 
A year earlier, RBJ recorded a vacancy rate of 21 percent of the then-available 3.7 million square feet for the suburban “Greater Boston” sub-region for the six months ending March 31.  A Route 128 North figure was not available.
 
Speaking with BRN in July, a veteran of the Boston region’s commercial real-estate market not connected to Burlington Research Center said it and other suburban biocampuses could succeed. “There’s certainly a very large employment base out in the suburbs that is comparable to Cambridge, and as some of these companies in the suburbs grow and become financially viable, I don’t see why they wouldn’t want a building built in that beautiful Burlington type of environment,” said Dan Cordeau, an executive vice president at Jones Lang LaSalle’s Boston office.
 
Still another commercial real estate firm, Cushman & Wakefield, has recorded27 biotech companies — 19 of them from Cambridge — that had relocated to Lexington and Waltham since 2001. During that time, no such companies have moved into Burlington — something Gutierrez and RBJ want to change, with the support of town officials.
 
Burlington Research Center is among several sites where the town wants to encourage life-sciences development, according to a draft economic plan completed last month. That plan, Opportunities and Barriers to Economic Growth: An Update of the Town of Burlington’s Economic Development Strategies, prepared by a team of consultants for the town, lists the center — under its previous name of Burlington Business Center — as one of three places where “health science” uses should be encouraged.
 
The other two are:
  • Burlington Woods Office Park, a three-building, 288,933-square-foot class A office space campus. The owners, a joint venture of Griffith Properties and Urdang Capital Management, acquired the campus last year for $66.5 million from another joint venture, Finard Properties and Mugar Enterprises; and
  • The 247-acre “Landlocked Parcel” bordered to the east by Route 3, and to the south by Route 128. In July, developer Patriot Partners of Lexington presented conceptual plans to develop up to 2 million square feet of research-and-development and biomanufacturing space over 10 years on the parcel’s southern portion.
Patriot has said it does not anticipate breaking ground on a project for the landlocked parcel for several years — time that town officials have said they need in order to reach consensus with residents on how the land should be developed. Citing the absence of such consensus, Burlington’s Board of Selectmen on Sept. 8 voted unanimously against issuing a formal request for proposals from developers interested in the property.
 
Even if a land-use direction emerges, and with it a more formal plan, Patriot would still face another hurdle to building life-sci space in Burlington: The absence of a road linking its parcel to a major highway.
 
Another commercial site, the former Sun Microsystems campus, will be partially redeveloped by a growing medical device maker into its new headquarters. Palomar Medical Technologies, a maker of laser and pulsed light systems for acne, hair removal, and other medical aesthetic treatments, won town planning board approvals last month for six special permits allowing it to build 180,000 square feet in two phases: a 130,000-square-foot building immediately, followed by a second building of 50,000 square feet some time in the future.
 
Nordblom acquired the entire 800,000-square-foot campus from Sun last year for $212 million, in a deal that allowed Sun to lease back the 450,000 square feet that it still occupies there. Nordblom plans to transform its portion of the campus to occupancy by multiple tech tenants. A repositioning is likelier to involve IT and traditional office users rather than life-sci companies given the cost of refitting the space, Varholak said.