Alexandria Sells 268K-SF Lab Development to Boston Children’s Hospital for $155M
By Greg Cornfield June 28, 2023 3:45 pm
reprints
Alexandria Real Estate Equities (ARE) (ARE) is still cashing in on life sciences development despite growing concern over demand in the sector.
The prominent owner and developer of life sciences campuses is selling a chunk of a lab project to Boston Children's Hospital.
The REIT announced Wednesday that it sold 268,000 square feet of a planned 660,034-square-foot Class A lab development in Boston’s Fenway neighborhood to the hospital for $155 million, or $578 per square foot.
When it’s complete in 2026, the development with partner Samuels & Associates at 421 Park Drive will be part of the larger Alexandria Center for Life Science – Fenway campus with more than 2 million square feet. The project is 48.5 percent pre-leased, including ground-floor retail. Construction is expected to begin later this year. Boston Children’s Hospital will continue to fund its pro rata share of the costs to develop 421 Park Drive.
“This creative, strategic sale of 268,000 rentable square feet of cutting-edge research space within our 421 Park life science development further illustrates the demand for our unique, mission-critical mega-campus assets in high barrier to entry markets,” ARE’s Hunter L. Kass said in a statement.
As of March 31, academic and medical research institutions comprised 12 percent of ARE’s annual rental revenue. In fiscal year 2022, Boston Children’s was the top recipient among all U.S. children’s hospitals in National Institutes of Health (NIH) funding.
The transaction comes shortly after investment management firm Land & Buildings raised concerns over a 50 percent drop in attendance at medical office properties after the pandemic. L&B specifically identified massive declines at ARE buildings throughout major life sciences markets, including a 56 percent decline in Boston.
ARE’s stock price was down about 3 percent Wednesday, and down 22 percent over the past year. The company reported higher revenues and strong leasing during the first three months 2023, however, but also announced it’s halting some developments in its pipeline valued at approximately $250 million.
Alexandria has a dominant presence in Greater Boston, which is the world’s top life sciences cluster, serving big-name tenants such as Eli Lilly and Moderna.
Overall, with a total market capitalization of $33 billion, Alexandria has more than 850 tenants on its roster and 75.6 million square feet in North America.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
