Roche's Foundation Medicine is getting a new 16-story home in Boston's Seaport District
A developer and an investment firm have joined together to add yet another biotech building to Boston’s skyline. And today, a private equity firm has joined the venture.
KKR announced today that it completed an investment and is now in a joint venture with WS Development and the Public Sector Pension Investment Board for 400 Summer Street, a life science tower under construction in Boston’s Seaport District. The amount that KKR invested into the construction of the project remains undisclosed.
400 Summer Street will be a 16-story building located in the center of Boston’s Seaport District submarket. The 635,000 square foot property will serve as the headquarters of Boston biotech and Roche subsidiary Foundation Medicine, which has leased all of the laboratory and office space.
Foundation Medicine was the personalized medicine firm that Roche spent $2.4 billion on in 2018 to completely buy out the company.
“We have a strong conviction in life sciences real estate and believe there will be lasting demand for high-quality lab and work space in the world’s top innovation centers,” said KKR partner Justin Pattner in a statement.
Demand for lab space and office space is at an all-time high, setting records and competition over the next year. The post-pandemic real estate market shows no signs of being slow — rather, it’s increasing and quite frankly, booming.
“Record-setting demand over the past 12 months is expected to continue, driving intense competition for lab space until 2022/2023 when new developments and conversions are delivered,” said Jonathan Varholak, a CBRE vice chairman specializing in life-sciences and Boston-area real estate in an interview with the Boston Real Estate Times in July.
There is also the aspect of limited space in the near future near Cambridge, so other companies must go to other parts of Boston to lease already built spaces — but they are not enough.
Boston is in the lead in terms of new lab space development, with 11 million square feet currently under construction, according to a report released by JLL earlier this month. However, nearly all the space expected to deliver this year is pre-leased, as well as roughly half of the 8 million square feet expected to deliver next year.
Part of the increase in activity can be traced back to venture capital funding. Between March 2020 and March 2021 during the height of the Covid pandemic, Boston biotech/biopharma startups and established companies have received close to $9.6 billion in venture capital funding, according to a CBRE report.
Through all indications, Boston’s life science real estate market has not slowed down after the pandemic — and does not plan to any time soon.