Union Square D2.1 | 10 Prospect Street | Somerville

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There's something very...Toronto-esque about the sheer juxtaposition of the tall, dense 'highrises' (highrise is a stretch here but--) to short mid-density older buildings.
 
I don’t think much (if any) of the lab space is leased. Saw last night that the interior is finished but completely empty—there aren’t any tenant build-outs whatsoever.

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Since lab space build-outs take a couple months minimum to complete, most tenants of new buildings are eager to start the construction process before the building is even finished. The fact that there isn’t any tenant construction activity whatsoever despite this building being almost 100% finished suggests that there aren’t any tenants.

Really makes me wonder if demand for lab space will recover in the next few years to fill the current massive oversupply, or whether we’ve built enough lab space to satisfy demand for the next 10+ years. If the latter, then I suspect Union Square will end up looking very different than the current US2 master plan.
 
Brick Top said:
...to fill the current massive oversupply...
Click to expand...
The demand might be there... just not the demand for those price points...

Looking at the charts below - vacancy rates are certainly rising quickly downtown, but a YTD negative absorption of under 100,000 SF and under 10% vacancy doesn't seem particularly concerning, especially at the top of a record pricing spike.

From the report, there are signs that this will increase however as expensive lease terms end and are renegotiated:
"Although sublease deal velocity has increased, the pace at which sublease spaces are coming onto the market has continued to outweigh the deal volume. This quarter, a Greater Boston market that never saw a total sublease availability above 600,000 sq. ft. from 2016 through 2021, recorded a net addition of 500,000 sq. ft. of sublease which brought the total to 2.4 million sq. ft. of sublease availability."
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This could be a great lesson of supply and demand in action for specialized commercial real estate. I don't think there's any universal database out there, but I'm wondering if we'll see some currently planned lab spaces (many of which were previously planned for residential or office) switch back to another use-case. With the glut of offices everywhere, maybe the marginal value of residential can start to pencil out more frequently.

For what it's worth, my connections in the life sciences world have been glowing about the abundance and price of sub-leases in prime locations. There's going to have to be a correction somewhere unless the new company pipeline starts to heat up again.
 
Justbuildit said:
This could be a great lesson of supply and demand in action for specialized commercial real estate. I don't think there's any universal database out there, but I'm wondering if we'll see some currently planned lab spaces (many of which were previously planned for residential or office) switch back to another use-case. With the glut of offices everywhere, maybe the marginal value of residential can start to pencil out more frequently.

For what it's worth, my connections in the life sciences world have been glowing about the abundance and price of sub-leases in prime locations. There's going to have to be a correction somewhere unless the new company pipeline starts to heat up again.
Click to expand...

There may just be a point where we have enough lab space.
 
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