The metro area’s favorable business climate continues to lure established biotech, pharmaceutical and medical technology companies, while also nurturing the development of start-ups and early stage firms. Access to elite academic and research institutions, government grants and tax incentives, and top-notch talent have been integral in the success story of Boston’s life sciences industry.
Grant funding through the National Institutes of Health in Massachusetts totaled more than $2.5bn in 2015, the highest since 2012 and behind only California. More recently, the governor’s office earmarked $63.9m for the upcoming fiscal year for the Massachusetts Life Sciences Center to further support the industry’s development. Life Sciences companies based in Boston continue to dominate public- sector fundraising as well. Following a banner year in 2015, which saw 11 Massachusetts-based biotechs raise $870m, the first five months of 2016 have seen five companies raise $316m. This accounts for 36% of the total funds raised by U.S.-based life sciences companies so far this year.
Cambridge-based Intellia Therapeutics had the industry’s second largest IPO in 2016 through May, having raised $108m. Earlier in the year, the company leased 65,000 sq ft of lab space in Mid Cambridge. This represents one of the many examples of the life sciences sector’s robust growth in Boston, which has driven the overall lab vacancy rate in Cambridge to 4.6%, the lowest level since NGKF began tracking the lab space market in 2001. The industry’s resounding growth has pushed lab rents in Cambridge to an unprecedented level. These circumstances have resulted in more office space renovations catering to life sciences tenants, in addition to the out-migration of tenants into the Cambridge periphery and the CBD’s Seaport District, where GE will soon be moving its global headquarters.
Dwindling lab space availability has quickly become the biggest obstacle facing most space users in Boston. Rising real estate costs are also entering the picture, but most of the industry has realized that having access to top- grade lab and research facilities, as well as attracting and retaining talent, are essential in this fast-moving sector. The aforementioned factors will also continue to act as growth catalysts and propel the development of Boston’s life sciences cluster well into the future.