🚨Cambridge’s once-tight Kendall Square lab market has swung from near-zero vacancy in 2022 to 10.4% by mid-2025. Tenant demand is overwhelmed by ~16.3M sq. ft. of available space across Greater Boston against just 1.9M sq. ft. of active requirements. Biogen, Intellia, and others are consolidating footprints, while venture funding into Cambridge firms has plunged. Distress is rising: Colliers warns loan defaults and rock-bottom sales are likely. For CRE, the underwriting lens must shift to longer lease-up, muted rent growth, higher concessions, and elevated cap rates.
Cambridge lab vacancy: 10.4% (Q2 2025) vs. ~0.5% (Q4 2022)
Greater Boston supply–demand gap: 16.3M sq. ft. available vs. 1.9M sq. ft. active demand (2025)
Cambridge VC funding share: 28% (2024) vs. 63% (2019)
Loan Performance. Rising vacancy pressures DSCR, especially for assets financed at peak leverage in 2020–21. Expect covenant breaches; cap-rate stress tests should assume 50–100 bps higher exits.
Demand Dynamics. Tenants are consolidating; biotech absorption has stalled. Concessions (TI, abatements) are essential to retain or backfill space. Flexible “innovation” tenants beyond biotech offer resilience.
Asset Strategies. Owners should explore lab-to-office/flex conversions and structure shorter leases with incubators/startups. Plan capital budgets for retrofit costs.
Capital Markets. Speculative lab debt is largely frozen; lenders demand pre-leasing. Opportunistic equity is circling distressed assets at 20–30% discounts.
Lab vacancies above 10% mark a sharp reversal.
Diversification beyond biotech is now critical.
Financing is cautious; spreads elevated.
Distress sales likely reset Cambridge valuations.
🛠 Operator’s Lens
Refi. Model higher cap rates; negotiate with lenders early on covenant flexibility.
Value-Add. Position vacant labs for interim uses (incubators, coworking labs); TI allowances must be front-loaded.
Development. Pause speculative starts without anchor leases. Factor 12–24 months for stabilization.
Lender POV. CMBS and banks are defensive, requiring equity cushions and multi-tenant strategies.
Vacancy relief unlikely before late 2025–26.
Expect more distress transactions over next 12–18 months.
Massachusetts may offer policy support for life sciences re-growth.
Long-term fundamentals remain intact, but recovery will be gradual.
Bloomberg Law — Cambridge Seeks Alternatives as Biotech Lab Boom Fizzles (Sept. 23, 2025). Boston Globe — Cambridge Lab Market Faces Glut as Biotech Pullback Persists (Sept. 2025). Lincoln Property Co. — Boston Life Sciences Market Report (2025). Bisnow — Owners Mull Conversions as Cambridge Labs Empty Out (2025). Banker & Tradesman — Cambridge Lab Vacancies Hit Double Digits (2025).
