Leggat McCall Properties and DLJ Real Estate Capital Partners broke ground this summer on Somerville’s 101 South St., a speculative 289,000-square-foot class A lab building, as they seek to establish Union Square as a new life science cluster. Image courtesy of Leggat McCall Properties

Somerville’s past and future collide in Boynton Yards, a pocket of industrial parcels on the cusp of a development wave. 

Luxury condos overlook scrap metal yards, a commercial laundry and auto body shops. A four-story manufacturing building best known as the home of the Taza Chocolate factory has added a group of venture capital-backed startups, ranging from robotics manufacturers to virtual reality researchers, in less than two years under new ownership. 

The new breed of tenant bodes well for new office and lab construction. Boston-based Leggat McCall Properties and DLJ Real Estate Capital Partners of New York envision a life science cluster tapping into the proximity to Kendall Square and the 2021 arrival of the MBTA’s Green Line Extension. After breaking ground on a 289,000-square-foot office and lab building at 101 South St. two months ago, the developers this month closed on a $23 million transaction for an adjoining 3.1-acre site, giving them over 6 acres for a planned 1 million-square-foot mixed-use development. 

“Every developer in the world has been down here knocking on doors,” said Bernard Gibbons, a broker for Cambridge-based ABG Commercial Realty. “It’s hard to put [development sites] together because there’re not a lot left. You really had to be here three years ago.” 

Gibbons began working with developers on acquisitions in Boynton Yards six years ago, as plans for the MBTA Green Line Extension and its nearby Prospect Street station emerged. Somerville officials saw Boynton Yards and Union Square directly to its east as a logical step for an urban renewal plan spanning 117 acres, and selected developer Union Square Station Assoc., also known as US2, to lead the 2.3 million-square-foot mixed use development. US2’s first commercial building – a 175,000-square-foot office-lab building – is expected to break ground in early 2020, US2 said in a statement. The first phase also includes a pair of multifamily buildings containing a combined 250 units. 

Options for Early-Stage Ventures 

From Allston to Alewife, from Watertown to the Seaport District, life science companies are leasing up office and lab space faster than developers can deliver it. Cushman & Wakefield is tracking 2.5 million square feet of life science space requirements in Greater Boston, with developers exploring a range of office and industrial conversions and ground-up construction projects. 

For 101 South St., asking rents are expected to be roughly 25 percent below comparable buildings in Kendall Square, said Duncan Gratton, an executive director at Cushman & Wakefield which represents 101 South St. in leasing. 

The location less than a mile from Kendall Square will enable future tenants to tap into a local workforce that includes a tech-savvy population, while connecting via a one-stop Green Line ride to another life science hub rising at DivcoWest’s Cambridge Crossing. Sanofi Genzyme is consolidating its Greater Boston operations in 900,000 square feet at the 43-acre site in 2021. 

Union Square master developer US2 plans an early 2020 groundbreaking for its first commercial building, a 175,000-square-foot office and lab complex at Prospect Street and Somerville Avenue. Image courtesy of US2

For 101 South St., the bulk of the tenants are likely to be early-stage ventures, Gratton said. 

“More than likely it will be a multitenant building. The floor plates are 30,000 square feet and it’s a great building for small- and mid-sized tenants, which are the bulk of the market,” he said. 

The 101 South St. lab building is scheduled for completion in mid-2021, giving it a head start on the first commercial building at US2’s 2.3 million-square-foot master-planned development. Following years of debates on topics such as affordable housing requirements and community benefits, US2 now plans to break ground in early 2020 on a 175,000-square-foot office and lab building at Prospect Street and Somerville Avenue. 

Rents will be competitive with the urban lab market in areas such as Boston’s Seaport District, and offer terms that reflect the unpredictable space needs and timelines of life science companies, said Molly Heath, a managing director at leasing agent JLL Boston. 

“We’re trying to build an ecosystem down there, and flexibility is certainly a piece of that,” Heath said. 

The development fills longtime demand for workspaces tapping into the local workforce and ground-floor attractions. 

“It’s always been a neighborhood that people have asked about specifically and what the options are,” Heath said. “It’s already amenity-rich, with cool restaurants and retail. We’ve got the live and play, and now this is the work part.” 

‘Overflow’ from Kendall Square 

Newton-based Riverside Properties anticipated Boynton Yards’ changing commercial real estate scene when it acquired a multitenant property at 561 Windsor St. in February 2018 for $15 million. The 4-story, 94,000-square-foot building was 100 percent–leased to Taza Chocolate and a mix of office, manufacturing and fabrication tenants when Riverside Properties acquired it in February 2018, Riverside Properties Partner Brett Levy said. But it immediately became clear that there was potential to create a tech office cluster. 

Steve Adams

“A lot of the tenants that we talk to were previously closer to the Red Line. When they come over here, they say, ‘The location is great and the rents are less than half of what they are in Kendall,’” Levy said. 

The new class of tenants includes Labster, a Danish startup that raised $21 million in series B venture funding this year for its virtual reality headsets used in high school and college tech classes, and OrangeGrey, a manufacturer of warehouse robots. Approximately 25,000 square feet will become available over the next 12 months amid tenant turnover and building renovations. 

“We’re getting a lot of interest from people affiliated with MIT and Kendall Square, and this is an overflow area,” Levy said. “Once the GLX opens, it will become more of a destination. It’s incredible how this undeveloped stretch of land [Boynton Yards] hasn’t really been touched. It’s just a matter of time before this area is developed.”

Updated 5:01 p.m., Oct. 1, 2019: This article has been updated to correct the total acreage involved in the Cambridge Crossing project. It is 43.