Burlington office buildings that have been sparsely occupied since the onset of COVID are being eyed for lab conversions, spurred by a recent rezoning of the town’s Innovation District. A former record company headquarters is being marketed for sale as a life science conversion and expansion. Photo courtesy of SVN Parsons Commercial Group

Burlington’s latest effort to build a new suburban Boston life science cluster is getting traction among developers and spurring new activity in office parks set to be repositioned with biotech at the forefront. 

The town recently doubled allowed density for commercial development in its newly-branded “Innovation District” spanning almost 150 acres near Route 128, while adding life science as a by-right use. The new fast-track zoning is tailor-made for the needs of rapidly-expanding lab tenants, and developers including Burlington-based Gutierrez Cos. are already drawing up development and conversion plans for office and retail properties. 

“The more space that gets filled up in the broader Middlesex 3 market area, the more demand that seems to create as a lot of these companies seem to cluster in that market,” said Scott Weiss, vice president of development for Gutierrez Cos. 

The firm was responsible for Burlington’s highest-profile life science development of the past decade when it developed EMD Millipore’s new 280,000-square-foot research campus on Summit Drive in 2017. 

Approved at a town meeting in late September, the town’s new “Innovation District” replaces a former high-rise industrial district that includes a jigsaw puzzle of commercial properties, mainly located south of Route 128 between Middlesex Turnpike and Cambridge Street (Route 3). 

Office vacancies in Burlington sat at 16.3 percent at the end of the third quarter, according to Newmark research, with average asking rents of $36.77 square foot, while new lab space commanded $50 per square foot.

Office Stagnation, Lab Potential 

Burlington’s status as a leading suburban office market hasn’t insulated it from COVID-induced leasing stagnancy, prompting office landlords to consider other options. Office vacancies sat at 16.3 percent at the end of the third quarter, according to Newmark research, with average asking rents of $36.77 square foot. 

By contrast, asking rents for new lab space in Burlington are in the high $50 per square foot range, presenting a compelling option for developers willing to spend the extra money on lab building construction. One life science deal in Burlington set a recent high-water mark of approximately $65 per square foot, said Matt Daniels, New England brokerage lead at JLL.  

“I hear all the time that it’s not a life science market,’” Daniels said. “Most of these people are driving by Burlington on 128 or Route 3 and passing Burlington. It’s never been about the access to talent: it’s been about the [lack of] available product and the highest and best use.” 

Even before COVID accelerated the suburban office-to-lab demand shift, Gutierrez Cos. began shifting its focus to life science when it upgraded its speculative and vacant office building at 4 Burlington Woods Drive to lab building infrastructure in early 2019. 

Rebranded as Burlington BioCenter, the 110,000-square-foot building is expected to be fully leased by year’s end, Weiss said. While specific tenants haven’t yet been disclosed, most are mid-stage biotechs that are looking in the suburbs for expansion space unavailable in Cambridge. 

Gutierrez now is marketing a 250,000-square-foot life science site at 300 Summit Drive next to the EMD Millipore campus as a build-to-suit opportunity. It’s planning to break ground in 2022 on a 190,000-square-foot life science building called Nexus at 43 South St., a nearly 6-acre vacant site being marketed by CBRE. And it has another undisclosed 110,000-square-foot office building in Burlington under agreement with plans for a lab conversion ready for tenant fitouts in the second half of 2022, Weiss said. 

Expansion and Repositioning on Rounder Way 

Another longtime Burlington commercial landlord is tapping into the Innovation District zoning as an opportunity to sell the property for a potential lab play. 

The 42,000-square-foot office building at 1 Rounder Way is the former home of bluegrass record label Rounder Records, which relocated to Nashville in 2013. 

David Reinfeld and Louis Frate, who bought the property in 2010 for $2.6 million, moved their energy companies into the building after Rounder’s departure before selling them in the past two years. As replacement tenants deemphasized office space during COVID, they began exploring other options. 

“The traditional office space became more of a placeholder for these companies while they were sorting out working remotely or transitioning to smaller spaces,” Reinfeld said.  

Steve Adams

After successfully gaining approval to add the property to the Innovation District in September, they’re marketing the property as a potential office-to-lab conversion and expansion. The new zoning allows approximately 36,000 square feet of additional development, said Marci Alvarado, who is listing agent for SVN Parsons Commercial Group. A recent potential deal fell through in mid-October and the property is back on the market. 

A cluster of Gutierrez Cos. properties off Cambridge Street also has new potential for repositioning following their addition to the Innovation District. 

A medical building anchored by Atrius Health at 20 Wall St. will be part of an expanded medical office and life science campus, Weiss said, along with future redevelopment of two single-story retail and restaurant buildings at 2 and 10 Wall St. And a 189,000-square-foot office building at 1 Wall St. will be upgraded with lab infrastructure as vacancies appear in coming years.