Massachusetts’ Big Pharma Cluster and Its Impact on Commercial Real Estate

Posted on: Wednesday, June 28th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liz Berthelette, Director of Research NAI Hunneman. Liz is a seasoned CRE researcher with a penchant for maps, graphs & data; providing insights on the local Boston market and beyond.
Massachusetts, anchored by Cambridge, is home to one of the largest biotech clusters in the world. With many of the leading “big pharma” firms maintaining a presence here, this industry has become a key driver of commercial real estate demand throughout the Bay State. In fact, 16 out of the top 20 pharmaceutical companies investing heavily in research and development operations lease and/or own space in Massachusetts. In looking at the potential future demand for office and/or lab space these heavy investors will likely play a key role, especially if their current presence in the marketplace is minimal.

The chart below highlights each firms’ research and development investment dollars in the fiscal year 2015-16 and its estimated real estate footprint in Massachusetts. Novartis ranked first in the European Commission’s 2016 EU Industrial R&D Investment Scoreboard and occupies more than one million square feet in Greater Boston. Due to its MA-based headquarters operations, Biogen boasts one of the largest footprints in the market despite ranking among the bottom of this list for investment dollars.

Pharma R&D
*Occupied by Roche subsidiary, Iquum.
Sources: EU Scoreboard 2016 (World 2500), Costar, NAI Hunneman Research

There are a handful of firms that made the list that have little to no real estate presence in Massachusetts such as Roche, Eli Lilly, Johnson & Johnson and Bayer. With that said, many are planning to expand in Cambridge or are already collaborating locally:

• Reportedly, Eli Lilly and Johnson & Johnson have fairly large requirements out in the Cambridge market.
• Novo Nordisk has been collaborating with MIT on next generation drug delivery devices since 2015.
• Bayer is opening its East Coast Innovation Center in Cambridge.
• Boehringer Ingelheim’s venture capital arm opened in Cambridge in 2013 in order to invest in early-stage biotech companies.

One of the area’s largest pharmaceutical companies, Shire PLC, has continued to expand and currently occupies more than two million square feet in Greater Boston. However, the Lexington-based firm only invested $872 million in research and development last year; ranking the company 30th on the list. With that said, Shire recently agreed to lease 343,000 square feet at the Genzyme Center building in the heart of Kendall Square; establishing a hub for the research and development of rare diseases. This new innovation hub will house roughly 1,000 workers by 2019 ― after Genzyme relocates to its new headquarters nearby. One would expect Shire’s investment dollars to increase once this new R&D facility is operational.

Looking at revenues as opposed to R&D investment in the chart below, 14 out of the top 20 global pharmaceutical companies maintain a real estate presence in Massachusetts. Interestingly Johnson & Johnson, Bayer and Roche top this list as well. Other major pharmaceutical firms lacking a Massachusetts address include Sinopharm Holdings, Medipal Holdings and Alfresa Holdings. Could one of these companies be the next to set up shop here?

Pharma Revenue
*Occupied by Roche subsidiary, Iquum.
Sources: EU Scoreboard 2016 (World 2500), Costar, NAI Hunneman Research

While growth from companies currently located in Massachusetts will remain an important driver of commercial real estate, firms not-yet established here likely offer greater potential for future demand.

Greater Boston Property Markets Start Year on a Positive Note

Posted on: Wednesday, June 28th, 2017, under Commercial Real Estate, Guest Authors, Research.

Bob Samiiby Liza Berthelette

Positive absorption was seen across all property types in Greater Boston. Metrowide office absorption totaled more than 300,000 square feet with the suburbs leading the charge. The lab market, particularly Kendall Square, remains as-tight-as ever. And fundamentals continue to improve in the industrial market as vacancies have reached new lows.
The New Year has brought continued uncertainty in the marketplace. However, many signs are still pointing to a stronger macroeconomic outlook in the near term. In January, the International Monetary Fund revised its U.S. growth forecast up slightly for both 2017 and 2018. A more solid economic outlook would likely bolster the commercial real estate property markets. There are still several trends worth keeping an eye on in the coming quarters that could result in up or downside risks to Boston’s outlook. Proposed budget cuts to NIH funding and concerns surrounding inflation are two to watch.

Below are some highlights from NAI Hunneman’s Q1 2017 market reports:

The Greater Boston lab market remains hot. Net absorption totaled 219,492 square feet metrowide in the first quarter, with the Cambridge markets accounting for roughly half of this space. Metrowide vacancies are nearing 3% and East Cambridge vacancies are just a mere 0.2% as demand for space remains heated. With little new product on the immediate horizon and strong demand for space, look for market conditions to remain favorable in the coming quarters.

The Greater Boston office market posted another positive quarter with more than 300,000 square feet in net absorption. Results were mixed with East Cambridge, Route 128 West and the Back Bay posting some of the strongest absorption. Metrowide vacancies inched down to 11.2% in the first quarter and direct asking rents grew to nearly $33 per square foot.

The Greater Boston industrial market absorbed more than 500,000 square feet of space in the first quarter of 2017. Vacancies are sub-8%; reaching levels not seen in more than 15 years. Demand drivers remain vast and varied. E-commerce, housing and building-related firms, drug manufacturing, third-party logistics, breweries and medical marijuana facilities are all bolstering industrial demand in the marketplace.

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Berkshire-Hathaway and RealMassive Announce Commercial Data Partnership

Posted on: Tuesday, June 13th, 2017, under RealMassive News.

June 13, 2017

RealMassive, commercial real estate’s first open and connected digital marketplace, will provide automated property listing and digital marketing exposure for all Berkshire Hathaway HomeServices Commercial Group’s (BHHS) represented commercial properties. Through an innovative API-based connection,  BHHS’ inventory data will transfer automatically and in real-time to RealMassive’s national, open database. The connection also delivers BHHS’ brokers and their clients mobile-optimized visibility across multiple markets, search, and social channels.

“We’re excited and pleased to be the first commercial real estate brokerage service provider to partner this way with RealMassive and take the first steps toward real open access for commercial real estate property data. Open access to CRE property data is changing the way brokerage is done and at Berkshire Hathaway HomeServices Commercial Group we’re proud to be the first to automate with RealMassive. It gives us a real advantage for our clients, for our agents and for the business community.” – Michael W. Fields.

“Our partnership with this industry giant and established household brand further separates us from traditional commercial data providers. Like us, the BHHS team is in constant pursuit of modern, digital business practices and we are excited about our future together. RealMassive’s focus on data automation, open access, and mobile solutions will help us both achieve our objectives as we support the growth and expansion of their commercial services division.” – Patrick Lashinsky, CEO of RealMassive

This announcement comes on the heels of significant advancements in data growth and market coverage for the Austin-based tech firm. Already presenting nearly four billion square feet of commercial property and land, RealMassive is in pursuit of tripling their property data inventory by the end of 2017.

To learn more about the details and benefits of this partnership, please email contact@realmassive.com.

About Berkshire Hathaway HomeServices Commercial Services:

Berkshire Hathaway HomeServices Commercial Services is among the few companies entrusted with the Berkshire Hathaway name, an enterprise worth more than $200 billion dollars today.

Our namesake, Berkshire Hathaway, was named the No. 1 company in Barron’s annual ranking of the world’s 100 most respected companies. This speaks to a commitment to business ethics and integrity over all else, as is consistently demonstrated by its chairman, Warren Buffett.

The company is built on the proven operational excellence, demonstrated integrity, and the reputation of Berkshire Hathaway – among the world’s most admired companies, according to Fortune’s 2012 ranking.

Simply put, the Berkshire Hathaway network of commercial real estate sales professionals share the strength of a solid universal business reputation that’s great for business.

About RealMassive:

RealMassive™ is commercial real estate’s open and connected digital marketplace, covering over four billion square feet of office, industrial, and retail space. The Austin-based SaaS firm provides CRE professionals with critical insights into the performance of their markets and portfolios while streamlining their marketing efforts. Users can list, search, and share data sets through an intuitive platform optimized for performance analytics, digital marketing, and inventory management.  realmassive.com