S. Boston life-science lab project scrapped
Developer sold property at deep discount amid current biotech funk
Prominent life-science developer Alexandria Real Estate Equities is closing out the year with another deeply discounted sale of property where it had planned to build a lab complex — another sign of the slowdown in the once-booming biotechnology industry.
The California-based real estate investment trust in November 2020 bought a selfstorage facility and shipping warehouse on E Street in South Boston for $168.5 million, later announcing plans to develop a 1 million-square-foot life-science campus there. Late this month, however, Alexandria sold the property at 380-420 E St. to two buyers for a combined $87 million — about half what it paid three years prior.
“Since our acquisition, the macroeconomic environment has changed,” Alexandria disclosed in a recent securities filing. “Upon our reevaluation of the project’s financial outlook and its alignment with our mega campus strategy, we decided not to proceed with this project.”
Alexandria also cited deteriorating macroeconomic conditions in its sale of Newton’s Riverside Center in June for $117.5 million — half the $235 million it paid for the office complex near the Riverside MBTA station in January 2020, where it had planned a 510,000-square-foot lab conversion.
The sales come amid a rocky time for the local biotech and life-sciences industry. Some 3,800 life sciences workers have lost their jobs in Massachusetts this year, the Boston Business Journal recently reported.
Companies on the hunt for lab space will have more options than ever in the next year or two, thanks to a wave of office-to-lab conversions and ground-up lab projects slated to come online soon. When many of those projects got underway — before and during the COVID-19 pandemic — their developers frequently cited intense demand from life-science companies, paired with lack of available lab space.
These days, however, those lab tenants — and the investors backing the companies — have an abundance of newly built labs to consider, and are likely to be cautious when choosing a new home, according to a recent research report from brokerage Newmark. Many will likely keep their focus on existing hubs of biotech activity in Cambridge and its immediate neighbors, the report said, rather than conversion projects outside of the urban cores.
Beyond Alexandria’s canceled project on E Street, multiple life-science developments are still in the works in South Boston. Oxford Properties and Pappas Enterprises in November filed plans with city officials for an eight-building lab and residential campus on West First and Summer streets. The Boston Planning and Development Agency board in October approved the master plan for 11 new buildings, many of them labs, near the Andrew MBTA station.
Alexandria’s E Street sale was split into two transactions.