With the growth of life science, AI, and technology companies in Boston and Cambridge, prime real estate is expanding into the suburbs. Many companies have become attracted to suburban Massachusetts as a viable location to expand. This week, Solomon McCown & Company attended the NAIOP bus tour and saw firsthand how development is progressing along route 128 in Waltham, Watertown, and Newton to accommodate the increasing need for the office, lab, and consequently, residential space. Here are our key takeaways:
Given the increase in demand for life science clusters, developers are building high-quality lab and office spaces on spec to accommodate growing tenant demand. Particularly for smaller, or startup tenants, who are expanding at a rapid pace and seeking a prompt relocation into a larger, built-to-suit HQ. Companies are seeking flexible, creative real estate that can accommodate multiple different uses and are surrounded by other companies working within the life science realm. This demand has brought in numerous developers, working to create multiple integrated, mixed-use developments in areas west of Boston such as Waltham, Watertown, and Newton. An attractive, non-traditional submarket is the availability of old mill and warehouse space – and there’s a high demand for it. The ability to transform these outdated assets into unique, state of the art facilities has attracted companies who desire an urban aesthetic.
Currently, many suburban offices are providing shuttle service to and from local T stops. For example, the 128 Business Council provides shuttle buses to and from the Alewife Red Line station, Newton Highlands Green Line station, and Waltham Center MBTA. Although most of the population working within these communities drives, property owners are investing in services like these and others (i.e. rideshare, bike share) to better accommodate non-driving commuters. Consequently, mixed-use developers are not limiting their developments to office and lab space, but now expanding into residential, retail, and public green spaces. This, in turn, is attracting employees to not only work within these suburban developments, but to also live there.
As employees relocate closer to their suburban offices, property developers and managers are working to offer top-tier, next level amenities. Some of these include fitness centers, food courts, barber shops, movie theatres, and art galleries. Mixed-use residential-over-retail development is further enticing residents by offering close access to high-end restaurants, bars, and gyms.
New trends are also emerging to accommodate millennial desires, such as complimentary butler services and the implementation of innovative package delivery services that remove the necessity of a concierge. Property managers are finding that when offered the top-tier services comparable to those experienced in the city, tenants are willing to pay the extra price.
In summary, institutional capital for life science product is expanding to areas unseen before. Non-traditional/industrial assets that once sat unnoticed are now attractive to companies seeking interesting real estate. Multi-family and retail developers are taking note of the growth and moving in and around it, creating a true live, work, and play environment. The NAIOP bus tour provided us with incredible insight into this tremendous growth and we are excited to see how the suburbs of Massachusetts continue to transform in the coming years.