Given the upheaval of the office market, it’s not all that surprising these days to hear about a company that focuses mainly on developing and owning offices to announce they are pivoting to the industrial or retail sectors. But when the country’s largest multifamily property manager, Greystar, announced it was entering the life sciences sector in the U.S. with its first new development project in the country’s largest life sciences market, it raised some eyebrows. It isn’t the first time Greystar has expanded into other real estate areas. After launching an industrial platform in 2020, the company has nearly $2 billion in logistics assets under management across the U.S. But the company’s new foray into the life sciences sector with many other projects planned is something that major life sciences players will certainly be looking at closely.
Greystar’s first life science project is 74M, a 468,000-square-foot property that will offer lab, R&D, and supporting office space when it opens in 2024. Located just outside downtown Boston in an area called Somerville, the project is set to have a slew of sustainable features. The property is being built to achieve Platinum status from three green standards: LEED, WiredScore, and WELL. The developer is also planning to obtain SmartScore certifications for the project’s focus on tenant well-being, digital infrastructure, and tech used in achieving sustainability. Construction on the development began in July 2022 and topped out in May of this year. The progress on the project marks a turning point for Greystar, which has been preparing for entry into the life sciences spaces for years.
The first step began in the summer of 2021, when Greystar and its partner, CPP Investments, announced a joint venture to develop life sciences properties in the U.S., with an initial investment of $1.2 billion. “Our focus is building Class A, ground-up in prime locations in traditional life sciences markets,” said Matt DeNoble, Senior Director of Life Science Investment Management at Greystar. DeNoble joined Greystar earlier this year to help grow the company’s burgeoning life sciences platform.
With 74M, Greystar took cues from its 30 years of experience as a multifamily operator and put a strong focus on the building’s experience. Building amenities, which span 16,000 square feet, start on the ground level, where there will be two cafes. Half of the building’s top floor will be dedicated to communal space, including a wellness center, a 2,500-square-foot conference center, a fully-connected boardroom, and a deck with fire pits and a view of the Boston skyline. The property will also include 4,500 square feet of retail space on the ground floor. An ongoing art program will feature a curated mix of pieces from artists including Charles Gaines, Timothy Curtis, and Tara Donovan.
The project is the first life sciences development of its kind, according to Greystar, and will have state-of-the-art labs and research facilities. The 15-story property will have 35,000-square-foot floor plates that allow for flexible floor plans. Triple-glazed window panes, irrigation water reuse systems, and EV charging stations help the property hit its high sustainability marks. Air quality is also a major focus at the property, which will use an efficient HVAC system that takes in 100 percent outside air and filters, heats, cools, and dehumidifiers, or humidifies the air before it is mixed with return air.
Starting in Boston makes sense for Greystar; it’s the largest life sciences and biotech market in the country, and there’s still a lot of demand for space, especially high-end lab space. For their first project, the team chose a location in the Assembly Square neighborhood just north of downtown Boston. The building’s location is close to Cambridge and Kendall Square and is just a short walk from a subway stop. In a nod to the neighborhood’s walkability and transit options, as well as a connection to a nearby bike path, the property will also have bike storage for more than 100 bikes. “It’s already an established submarket, and this is an emerging little cluster we’re creating,” DeNoble said.
Greystar is anticipating a core shell completion of 74M in the spring of 2024 and, as of yet, has not signed any tenants. Greystar is hoping that this kind of quality space will resonate with life sciences tenants in a market that has cooled off from the peak demand seen two to three years ago. Back then, there was barely enough space to keep up with that demand. “A lot of leases were signed in less desirable buildings because, frankly, tenants just needed space,” DeNoble said. “I think now you have to provide something really special.” Greystar has dubbed the 74M project a “triple platinum” building, a nod to its LEED, WiredScore, and WELL Building certifications it is planning to achieve.
Other major real estate players have made big investments in the life sciences arena recently, as demand for life sciences space skyrocketed over the last several years. Blackstone launched a life sciences investment division in 2018 as the market was rapidly heating up, and last year closed its first fund focused on life sciences at $1.6 billion. In 2020, global real estate firm Hines entered the life sciences market with its first project Levit Green, a sprawling, 52-acre life sciences campus in Houston. Despite the recent cooldown in the life sciences market, Greystar has long-term development plans for the sector. More projects are being considered in the Greater Boston area, and the company plans to seek opportunities in most major markets around the U.S., with a focus on ground-up, Class-A life sciences properties, DeNoble said.
Greystar’s new project in the country’s largest life sciences market is a preview of the future of the growing biotech industry. Companies will increasingly have to compete to find and retain highly specialized talent. Office and laboratory buildings will be an important part of that competition. Buildings that are able to provide the most advanced workspace with hospitality-inspired comfort will be a sought-after commodity. The opportunity in life science real estate is so alluring that even multifamily giants like Greystar are willing to throw their hat in the ring.