One Kendall Square is currently about 99% leased. Anchor tenants include: Akamai, Abcam, Cogo Labs, Merrimack Pharmaceuticals, InVivo Therapeutics and the Massachusetts Institute of Technology. The seven-building complex consists of 48% office, 36% laboratory, 16% retail or other space. The property also features a 1,530-space parking garage.

Part of the deal is a fully permitted development site that can accommodate 172,500 square feet of newly built space. Tom Andrews, EVP and regional market director for Greater Boston for Alexandria, tells Globest.com that the REIT hopes to begin construction on the new building in the next six months. There are several vacant buildings at the development site that will be demolished to make way for the new building, he notes. The property will be delivered in an 18-20-month timeframe.

Andrews says that Alexandria has already received several proposals for the new building, including one that calls for a lease of nearly the entire building, while another would involve a company occupying approximately half of the property.

Alexandria is currently working on the design of the new building, but has not finalized the development cost. Andrews says the early lease discussions “is a demonstration that the market is pretty active and very tight.”

NGKF's Maher says of the trade, “One Kendall Square offers a critical mass of best-in-class, institutional-quality real estate. Combined with nearly $100 million in capital improvements throughout the past 10 years, the campus clearly represents a generational opportunity within the white-hot East Cambridge submarket.”

Alexandria notes that it has the opportunity to increase cash flow at One Kendall in the near term because the average $47-a-rentable-square-foot in-place rents are below market. The firm reports that 55% of the property's contractual lease expirations run through 2019.

He says the average asking rent for lab space at One Kendall Square is in the high $60s to low $70s per-square-foot (net), while asking office rents are in the same range on a gross basis.

NGKF calculated the overall laboratory vacancy rate in Cambridge in the second quarter at 4.6%. In its third quarter office report, the brokerage firm calculates the office vacancy rate in Cambridge at 4.8%.

In order to meet the needs and demands of the changing healthcare industry, real estate professionals need to adapt their strategies to new circumstances. Join us at RealShare Healthcare Real Estate on Dec. 7 and 8 for insights on succeeding in both the right markets and product types as well as navigating and finding opportunities in the more challenging ones. Learn more.

EAST CAMBRIDGE, MA—Alexandria Real Estate Equities Inc., has closed on the largest Boston area office/lab purchase deal of 2016—the $750-million acquisition of the One Kendall Square complex here.

The Pasadena, CA-based office REIT acquired the 644,771-square-foot office/laboratory complex from DivcoWest of San Francisco. The two firms announced in July they had reached a sales agreement on the complex. DivcoWest acquired One Kendall Square in 2014 for $395 million from Rockwood Capital and Related Beal, which paid $211 million for the complex in 2006.

The deal to acquire the seven-building science and technology campus includes the assumption of a secured note with an outstanding balance of $203 million. Alexandria has previously stated that the note matures in February 2024 and bears an interest rate of 4.82%.

Newmark Grubb Knight Frank Capital Markets, which represented DivcoWest in the sale of the nearly eight-acre campus, calculated the sale price at $1,124 per-square-foot, which the brokerage states is the largest sale of 2016 in Greater Boston in terms of transaction size and on a per-square-foot basis. The NGKF Capital Markets Boston team led by US head of capital markets Robert Griffin, vice chairman Edward Maher and executive managing director Matthew Pullen, in conjunction with Newmark Grubb Knight Frank executive managing directors Mark Winters and David Townsend, oversaw the transaction of the mixed-use campus on behalf of DivcoWest.

One Kendall Square is currently about 99% leased. Anchor tenants include: Akamai, Abcam, Cogo Labs, Merrimack Pharmaceuticals, InVivo Therapeutics and the Massachusetts Institute of Technology. The seven-building complex consists of 48% office, 36% laboratory, 16% retail or other space. The property also features a 1,530-space parking garage.

Part of the deal is a fully permitted development site that can accommodate 172,500 square feet of newly built space. Tom Andrews, EVP and regional market director for Greater Boston for Alexandria, tells Globest.com that the REIT hopes to begin construction on the new building in the next six months. There are several vacant buildings at the development site that will be demolished to make way for the new building, he notes. The property will be delivered in an 18-20-month timeframe.

Andrews says that Alexandria has already received several proposals for the new building, including one that calls for a lease of nearly the entire building, while another would involve a company occupying approximately half of the property.

Alexandria is currently working on the design of the new building, but has not finalized the development cost. Andrews says the early lease discussions “is a demonstration that the market is pretty active and very tight.”

NGKF's Maher says of the trade, “One Kendall Square offers a critical mass of best-in-class, institutional-quality real estate. Combined with nearly $100 million in capital improvements throughout the past 10 years, the campus clearly represents a generational opportunity within the white-hot East Cambridge submarket.”

Alexandria notes that it has the opportunity to increase cash flow at One Kendall in the near term because the average $47-a-rentable-square-foot in-place rents are below market. The firm reports that 55% of the property's contractual lease expirations run through 2019.

He says the average asking rent for lab space at One Kendall Square is in the high $60s to low $70s per-square-foot (net), while asking office rents are in the same range on a gross basis.

NGKF calculated the overall laboratory vacancy rate in Cambridge in the second quarter at 4.6%. In its third quarter office report, the brokerage firm calculates the office vacancy rate in Cambridge at 4.8%.

In order to meet the needs and demands of the changing healthcare industry, real estate professionals need to adapt their strategies to new circumstances. Join us at RealShare Healthcare Real Estate on Dec. 7 and 8 for insights on succeeding in both the right markets and product types as well as navigating and finding opportunities in the more challenging ones. Learn more.