William Kane: I think to really understand what is happening in Cambridge, it is really important to understand the overall context of the market, what is happening to the broader life science and health care sectors. Naturally, I am not telling you anything new that there are greater demands placed on healthcare in terms of an aging population and emerging global markets. Our CEO Alan Gold, who founded our company and to a great extent founded our industry and is a real visionary, cites the fact that it is really human nature to continue look for ways to improve well being and longevity. And with all that social support, we are seeing a lot of positive dynamics go into the industry, especially not just the demand for healthcare itself, but in healthcare therapies and in a real diverse set of economic indicators—venture capital in this area hitting $2 billion, NIH (National Institutes of Health) in this area also hitting $2 billion, new philanthropic type investors putting money into the system, as well as the normal course of raising capital in the public markets. So with all these different positive pressures, we are seeing a real strong dynamics with the companies that we are dealing with in Kendall. (Globest.com: BioMed Realty Trust owns approximately 3 million square feet of biotech/laboratory space in Kendall Square and in the Longwood (Ave.) markets in Cambridge and Boston).

Globest.com: What are these tenant dynamics you speak of?

William Kane: We are seeing larger tenants like Biogen take more space in some of our buildings. We are seeing Ipsen, Baxalta, Lilly and AbbVie come from other areas… So with all these positive dynamics fueling the life science industry and the tenants and the companies we work with, we are seeing an extraordinary amount of demand on the fixed assets we have in Kendall (and in Longwood) and that has resulted in some unusual transactions, what we call forward leasing, with respect to Dana Farber (Cancer Institute) in Longwood and Alnylam (Pharmaceuticals) in Cambridge. The Alnylam transaction was so interesting we won a (Life Science Deal of the Year) award from the Commercial Brokers Association the other night.

Globest.com: What was so unique about the Alnylam deal?

William Kane: Well, the transaction relates to a building that we call 675 West Kendall St. with a beautiful signature architecture type design. Vertex Pharmaceuticals has been leasing it for a good length of time and their term runs until 2018. So in 2015 we secured a transaction with Alnylam Pharmaceuticals to take the whole building, a building that is not available for another three years. And so it was a long look out. It was a 15-year lease and a 300,000-square-foot transaction… We really like the outlook for Alnylam. They have a great leadership team—John Maraganore (CEO) and Barry Green (president and COO) and they have this concept called “Alnylam 20-20” that has them launching a number of commercial therapies. To launch commercial therapies and to get into the next stage of clinical trials you have to secure the resources, the people and the space to do that. And that is why this market is seeing those types of forward leasing transactions. They have to lay that groundwork to prove to their team and their investors that they have the resources to fulfill their plan.

Dana Farber was similar—a 50,000-square-foot lease with a 12-year term (at BioMed Realty's Center for Life Science building in Boston) that also involved securing the transaction in advance of their space rolling in 2018. So it is a relatively new phenomenon. It has happened in the past but not to this degree.

Globest.com: In part two of our conversation with the BioMed Realty executive, Kane discusses the rise of amenities in the life sciences sector as well as the “power of proximity.”

Part 1 of 2

BOSTON—The hot commercial real estate sectors continue to be biotechnology, biopharmaceutical and healthcare, which are driving vacancy rates down and investment higher in the Silicon Valley, the Research Triangle and particularly in the Boston-Cambridge area here.

With vacancy rates for lab space in the single digits in Cambridge, Globest.com turned to William Kane, senior vice president, Boston lead for BioMed Realty, in this exclusive Q&A to understand the dynamics of the life sciences market and what landlords need to do to stay competitive in a market where demand is high and tenant expectations are even higher.

Globest.com: Why are the Cambridge biotechnology, pharmaceutical markets so active?

William Kane: I think to really understand what is happening in Cambridge, it is really important to understand the overall context of the market, what is happening to the broader life science and health care sectors. Naturally, I am not telling you anything new that there are greater demands placed on healthcare in terms of an aging population and emerging global markets. Our CEO Alan Gold, who founded our company and to a great extent founded our industry and is a real visionary, cites the fact that it is really human nature to continue look for ways to improve well being and longevity. And with all that social support, we are seeing a lot of positive dynamics go into the industry, especially not just the demand for healthcare itself, but in healthcare therapies and in a real diverse set of economic indicators—venture capital in this area hitting $2 billion, NIH (National Institutes of Health) in this area also hitting $2 billion, new philanthropic type investors putting money into the system, as well as the normal course of raising capital in the public markets. So with all these different positive pressures, we are seeing a real strong dynamics with the companies that we are dealing with in Kendall. (Globest.com: BioMed Realty Trust owns approximately 3 million square feet of biotech/laboratory space in Kendall Square and in the Longwood (Ave.) markets in Cambridge and Boston).

Globest.com: What are these tenant dynamics you speak of?

William Kane: We are seeing larger tenants like Biogen take more space in some of our buildings. We are seeing Ipsen, Baxalta, Lilly and AbbVie come from other areas… So with all these positive dynamics fueling the life science industry and the tenants and the companies we work with, we are seeing an extraordinary amount of demand on the fixed assets we have in Kendall (and in Longwood) and that has resulted in some unusual transactions, what we call forward leasing, with respect to Dana Farber (Cancer Institute) in Longwood and Alnylam (Pharmaceuticals) in Cambridge. The Alnylam transaction was so interesting we won a (Life Science Deal of the Year) award from the Commercial Brokers Association the other night.

Globest.com: What was so unique about the Alnylam deal?

William Kane: Well, the transaction relates to a building that we call 675 West Kendall St. with a beautiful signature architecture type design. Vertex Pharmaceuticals has been leasing it for a good length of time and their term runs until 2018. So in 2015 we secured a transaction with Alnylam Pharmaceuticals to take the whole building, a building that is not available for another three years. And so it was a long look out. It was a 15-year lease and a 300,000-square-foot transaction… We really like the outlook for Alnylam. They have a great leadership team—John Maraganore (CEO) and Barry Green (president and COO) and they have this concept called “Alnylam 20-20” that has them launching a number of commercial therapies. To launch commercial therapies and to get into the next stage of clinical trials you have to secure the resources, the people and the space to do that. And that is why this market is seeing those types of forward leasing transactions. They have to lay that groundwork to prove to their team and their investors that they have the resources to fulfill their plan.

Dana Farber was similar—a 50,000-square-foot lease with a 12-year term (at BioMed Realty's Center for Life Science building in Boston) that also involved securing the transaction in advance of their space rolling in 2018. So it is a relatively new phenomenon. It has happened in the past but not to this degree.

Globest.com: In part two of our conversation with the BioMed Realty executive, Kane discusses the rise of amenities in the life sciences sector as well as the “power of proximity.”