Biomanufacturing Eating Into E-Commerce's Dominance In Boston's Airtight Industrial Market

When Lincoln Property Co. purchased a 288K SF former Cisco Systems building in Boxborough four years ago, the $6M acquisition seemed ripe to cater to the local industrial market’s hottest asset, e-commerce.

But the politics of getting suburban Boston land rezoned for warehousing these days has gotten tougher.

“Lincoln, in an earlier proposal, had discussed the possibility of just that, warehouse space in the back of that site,” Boxborough Town Administrator Ryan Ferrera told Bisnow. “But as a town, we didn’t even bring it forward because we didn't think it would be supported by our town meeting.”

But around Boston, e-commerce isn’t the only game in town for industrial developers, and Lincoln Property pivoted. Since November, the developer has signed leases with Arranta Bio and Vibalogics, which will use the space for biomanufacturing. The use fits the site’s light manufacturing zoning and frees it from community concerns over e-commerce users’ traffic and pollution.

Biomanufacturing facilities are stepping into an already-competitive industrial market driven by e-commerce demands, experts said. The rapidly growing subset of life sciences assets has seized on openings in 2021 as last-mile delivery centers have faced stiff competition and backlash from residents.

Biomanufacturing users typically have similar real estate requirements as e-commerce buyers, including high bays, heavy power and parking ratios, Newmark Executive Managing Director Tony Coskren said.

“There’s definitely some interplay,” Lincoln Property Director of Research Peter Conway said of the competing assets. “What you’re starting to see more, when there’s an industrial building that breaks ground, it could be marketed to GMP or distribution.”

Boston’s Widett Circle represents the latest example of the battle for industrial land, with negotiations for the coveted 20-acre site coming down to four users, including a logistics company, believed to be Amazon, and a life sciences firm that would build a biomanufacturing facility, the Boston Globe reported this month. The site is currently home to meat and seafood distributors.

The Boston urban industrial market has just 4.1% vacancy among its 19M SF, according to JLL data. Greater Boston’s warehouse supply sits at approximately 100M SF with a 5% vacancy rate. There are more than 20M SF in warehouse requirements on the market, Coskren said.

Demand has been driven largely by Amazon, which made up 60% of industrial market activity in 2020 and is expected to have a portfolio eclipsing 12M SF across 34 facilities by the end of 2021, according to a study on e-commerce’s effects by the state’s Metropolitan Area Planning Council. 

Other major developments include Home Depot’s construction of a 775K SF warehouse north of Boston in Tewksbury and fitness bicycle maker Peloton inking a 75K SF warehouse lease in Middleborough 40 miles south of downtown. Lowe’s and an HVAC supplier last week inked leases for a combined 380K SF at a warehouse in Wilmington that had been vacant since 2017, a deal in which Coskren represented landlords The Seyon Group and Wheelock Street Capital.

A complete picture of biomanufacturing supply and demand is harder to come by, but Bisnow reported in January there’s a significant shortage of adequate real estate as companies want biomanufacturing hubs closer to their urban headquarters. 

“There’s a lot of developers and landlords like us that are thinking and repositioning assets to try to capture that market,” IQHQ Vice President Doug Cuff told Bisnow after announcing a 15-year, $72M biomanufacturing lease with Oncorus in Andover. 

IQHQ’s building will be repositioned after its previous iteration as a healthcare research hub for Japanese company Eisai, which moved to Cambridge in 2019. The facility is an example of how former flex and research space in the suburbs is increasingly being looked at for repositioning by GMP users, Hunneman Director of Research Tucker White wrote in a Q4 2020 report. 

Biomanufacturing developers have also chosen to go ground-up — like King Street’s 45-acre Devens speculative development — or find long-vacant warehouses tailored for conversions like Lincoln Property’s Boxborough site. Wheelock Street Capital last month purchased a $33M Sanofi Genzyme facility in Northborough, itself a former distribution facility. 

“I’d argue that [Good Manufacturing Practice] space is a lot more strained right now, that’s more tenant-specific,” White said. “There’s almost a couple dozen larger GMP requirements in the market, a lot of which are tied to biotechs here.”

Industrial market watchers told Bisnow they haven’t yet seen bidding wars between life sciences and e-commerce users for vacant buildings, and any battles would arise at the planning level where zoning can determine a site’s future.

“Once the building starts being built, say a warehouse starts to be built, then the GMP requirements aren’t as interested,” White said. “That’s when they start kind of drawing the line in the sand for the space.”

Ferrera said the competing interests by e-commerce and biomanufacturing users in Boxborough never materialized when Lincoln Property decided against building a last-mile hub. Opposition by communities to e-commerce has grown significantly, the Boston Globe reports.

E-commerce brings with it large size requirements: 14 of Amazon’s 20 currently operating Massachusetts facilities are 100K SF or larger, and companies like Home Depot have large, regional hubs . The massive footprint also includes high volumes of traffic generated by tractor-trailers, delivery vans and site employees, which can generate more than 1,000 vehicle trips a day, according to the MAPC report.

Biomanufacturing plants, which have moved into locations as small as 51K SF, may be a more attractive option for towns seeking to avoid the headaches of an e-commerce warehouse, White said. The two manufacturing plants in Boxborough have given the town of approximately 5,000 residents some name recognition, Ferrera said. 

“I hope some of the work that’s done here, maybe the new cure for some type of cancer, they may do the heavy legwork in, say, Kendall Square, but if they can manufacture it here in Boxborough, that’s a great thing to be affiliated with to help make people’s lives better,” Ferrera said. “I hope that we will be able to benefit.”