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Updated September 21, 2024, at 4:58 p.m.
BOSTON — Real estate firms are hitting the breaks on laboratory development in Allston.
A nearly billion-dollar project from National Development to redevelop a TV studio at 1170 Soldiers Field Rd. to build new offices, lab space, and housing is not moving forward, according to a person familiar with the process.
Another project at 1600-1850 Soldiers Field Rd., which would see three commercial developments and two residential buildings, has lain dormant since the developer, Trammell Crow, filed a letter of intent with the city in January 2023. It’s not clear if the development will ever proceed.
And a string of other major projects planned for the neighborhood — 103 N Beacon St., 155 N Beacon St., and 52 Everett St. — have all seen little apparent activity since receiving city approval anywhere from eight months to a year and a half ago.
In a statement, Douglass Karp, the president of New England Development, which is overseeing the Allston Yards project that includes 52 Everett St., wrote that “our commitment to the project remains strong.”
“We have permitted additional rental and for sale housing along Guest and Everett Street and look forward to bringing those forward over time, all of which will create much needed housing for the community.”
The firms behind the remaining four developments did not comment on the future of the projects.
The slowdown reflects broader trends in the market for lab space, experts said. A prime location and free-flowing capital to the biotech industry drew developers to the area during the Covid-19 pandemic, hoping to capitalize off Boston’s life sciences boom.
Now, interest rates are higher, and the flood of empty lab space means biotech firms can afford to be choosier about location and price. And real estate is feeling the crunch.
In short, it is now “the first life sciences real estate downturn that we’ve gone through,” according to Molly Heath, a managing director at real estate investment firm JLL.
The flood of development hinged on a gamble that biotech would continue to grow at a breakneck pace. But developers may have overestimated the demand for space.
Adam M. Koppel ’91, a partner on Bain Capital’s life sciences team and a board member for several biotech companies, attributed the shrinking demand in part to biotech firms shifting their focus to clinical research that requires less lab space — and in part to biotech investors tightening their once generous funding.
“Before 2022, we would never talk about the cost of our real estate bill or what we were paying to be somewhere,” he said. “And now we do — a lot.”
Heath estimated there were almost 16 million square feet of lab space currently available in Boston. Harvard’s Enterprise Research Campus and a three-building development called Allston LabWorks, both currently under construction, will bring additional hundreds of thousands of square feet of lab space to the area.
That’s compared to “two million square feet — plus or minus — of demand right now,” she said. “So it’s really challenging.”
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It could take up to six years just to absorb that supply, according to Young Park, the president of Berkeley Investments, a real estate firm.
The slump also has broader implications for the neighborhood: IQHQ, the developer behind 155 N. Beacon St., bought and demolished the Sound Museum — a beloved and affordable studio for local musicians — in preparation for the project.
And as developers go back to the drawing board, they could leave properties vacant for years or fail to deliver on promises of community benefits. Hundreds of units of affordable housing attached to those projects are also at stake. Developers could even be forced to sell off projects altogether.
In the case of the 1170 Soldiers Field Rd. project, millions of dollars of benefits have been promised in the form of payments to the parks department, local street improvements, and afterschool programming. It’s not clear if those will ever be delivered.
Still, experts said the slump will prove temporary in the long run — and is unlikely to threaten Allston’s position as a local life science center.
“Companies want to be near research institutions, they want to be where the brainpower is,” Tamara Small, the president of Massachusetts’ commercial real estate trade association.
In Allston, Harvard is a highly attractive source of brainpower for the biotech industry. Experts said the University is unlikely to face many troubles finding tenants for the billion-dollar ERC.
“With its proximity to Harvard Business School and Harvard’s Science and Engineering Complex, as well as Harvard’s innovation labs, the ERC is well-positioned to facilitate exciting opportunities for interdisciplinary collaboration and to attract top talent and leading companies,” Carl Rodrigues, the CEO of the Harvard Allston Land Company, wrote in a statement.
And the real estate slump should not be mistaken for a slowdown in the biotech industry overall, which continues to see positive growth, Small said.
Still, according to Harvard Economics professor Edward L. Glaeser, the stalling market “can be painful for the moment.”
“There are winners and losers,” he said.
—Staff writer Jina H. Choe contributed reporting.
—Staff writer Jack R. Trapanick can be reached at jack.trapanick@thecrimson.com. Follow him on X @jackrtrapanick.
