When COVID hit, people were forced to leave their offices and work from home; children attended school online; and everyone had to learn to cook because restaurants closed their doors.
For the world to safely open up again, we needed vaccines.
Investors understood that and saw the life science industry as a sure bet. Their investments led to new lab spaces being built across Greater Boston.
Takeda leased the nearly-completed 600,000-square-foot building at 585 Third St. in Kendall Square to create “One Cambridge,” its expanded research and development (R&D) and office space, in 2022. In the same year, Eli Lilly and Company announced its move to a 12-story site in Boston’s Seaport to — just like Takeda — expand R&D. And a few steps outside the city, Novo Nordisk acquired the Lexington-based Dicerna Pharmaceuticals in 2021 and opened an R&D space on Hayden Ave.
Around quarter four of 2021, Lexington had almost no vacant commercial space, Sandhya Iyer, the town’s economic development and tourism director, told the Observer. Revolutionary Labs, a new building at 1050 Waltham Street, was almost fully occupied on its opening day in 2022, she recalled.
“I used to get calls and I’d be like, ‘I don’t have any inventory,’” said Iyer.
During that boom, the Trammell Crow Company bought the parcel where the Quality Inn motel and Margarita’s restaurant once sat at 440 Bedford St., tore it down, and built a 300,000-plus-square-foot life sciences lab and office building. A similar building arose in Somerville — a 465,500 square-foot, 15-story lab office building called “74M.”
And the list goes on.
Construction on those projects wrapped up over the past few years. But to developers’ disappointment, much of the new lab space has sat vacant.
“A lot has changed between [the pandemic] and now,” Iyer said.
She sees what happened to the industry as a two-fold issue. First, Washington’s funding cuts have caused investors to take fewer risks, she argued.
“What’s happening with the funding cuts and all that’s happening in the federal [government], whether it’s the NIH funding or FDA approvals — the market has become volatile,” said Iyer. “People have started to take less risks, which means that for smaller life sciences companies that are doing their R&D, the funding is shrinking, they don’t want to take that much risk, and the market and the industry demand gets lower.”
Second, manufacturing practices have evolved and companies don’t need as much lab space to produce their products, Iyer said.
“The industry has learned about batch manufacturing, how they do R&D has changed, so as we are moving forward we are learning that we don’t need those kinds of huge facilities to create drugs,” she said. “Now we have an excess amount of inventory.”
About 20 million square feet — or about 34 percent — of life sciences space in Massachusetts was vacant going into 2026, a Colliers report shows.
“That’s an extremely high vacancy rate,” Iyer argued. “A healthy vacancy rate for any market would be anywhere between 4 and 10 percent.”
Boston had a vacancy rate of about 42 percent in Q4 2025, Cambridge sat around 24 percent, Boston’s suburbs (between the city and Worcester) 35 percent, and the inner suburbs (between the city and Route 128) 62 percent, according to the Colliers report.
There have been some recent wins for the industry, however. AstraZeneca is building a new 570,000 square-foot R&D center in Kendall Square that is set to open this year. And Convatec, a London-based medical products and technologies company, signed a life sciences lease expansion and extension on Maguire Rd. in Lexington earlier this week.
But overall, vacant lab space remains an issue.
Lexington has 2.9 million square feet of life sciences space, about 25 percent of which is vacant, Iyer pulled from the commercial real estate tool, CoStar. This time last year, the vacancy rate was 10.4 percent, she said. The lab space at 440 Bedford Street is a lot larger than other life sciences spaces in Lexington, so that coming online and sitting vacant has made the vacancy rate much higher.
Asked whether that high vacancy rate impacts taxpayers, Select Board member Mark Sandeen said, “it is a loss in the sense that there isn’t a functioning business there.”
Sandeen has been on the Select Board since 2019 and has experienced leading the town through the life sciences boom and now through the industry’s local recession.
Another industry is vying for space across Massachusetts now — the housing industry.
One common thought is to flip some of the vacant lab space into housing, but it’s not that easy. Lab space must have very specific and high-powered HVAC systems so the air in labs can constantly be purified. The ceilings in lab spaces are also uniquely high, making the cubic feet of each floor in a lab building much greater than that of a normal office building or residential building.
If the buildings were to be converted into residential space and the ceiling height and HVAC systems left the same, the rent for each unit would be astronomically high.
“That would be a huge, huge investment on the developers’ part,” Iyer explained.
For that reason, life science buildings would essentially have to be gutted to be turned into condos or apartments. Nonetheless, some developers are taking the project on.
“We’re seeing that happening a lot — real estate development companies right now are saying, ‘let’s do housing,’” Sandeen said.
The life sciences lab space and office building at 17 Hartwell Ave. in Lexington is being converted into residential housing under the MBTA Communities Act. The developer imagines turning the lab space into a five-story mixed-use multifamily housing complex with 312 dwelling units and retail space.
Other municipalities are converting commercial space into residential, too.
The development firm Bulfinch planned to turn the Muzi dealership off Route 128 in Needham into a 475,000-square-foot, two-building office and lab complex. But because the industry turned, the developer is now considering building a mixed-use project with hundreds of housing units.
In downtown Boston on Hawley Street, an office building will be converted into 110 apartments with commercial space on the ground floor. And in Brighton, a two-story commercial building will be converted into a five-story residential building that will host 42 units.
Some of the city leaders Iyer has spoken with are really happy about converting office space into housing, she said.
“They really need the diversity, they really need the housing,” she said. “Some of these lab buildings are really old and they would rather have them reconstructed into something much more needed.”
Some developers aren’t yet ready to make that call. Matt DeNoble, a senior director for Greystar, the developer behind Somerville’s 74M building, told the Boston Globe the firm is better off waiting for the right tenants than to try to force a use that doesn’t make sense.
“We’re starting to see groups say: ‘It’s time for us to make decisions,’” DeNoble told the Globe. “We are not worried long term about filling this building up.”
Iyer worries about Lexington going too far down the path of converting commercial space into residential space, however. Only about six percent of Lexington is commercial space.
“Losing that for any other uses will reduce the commercial space that we have, so that really worries me,” she said.
Lexington has some ideas on how to increase commercial tax revenue, however.
First, it could offer businesses various incentives for coming to town. An obvious incentive is to offer businesses a tax break. That would lower their operating cost with the goal of creating more jobs in town and stimulating the local economy. Lexington did not give any tax breaks to life science businesses that came to town as a result of the industry’s COVID-boom, Iyer and Sandeen confirmed.
Another incentive could be Lexington’s public transportation, Iyer explained. The town invested in the REV shuttle service which could bring employees back and forth to Alewife and Lexington.
Lexington has also had conversations with builders about converting portions of lab space, particularly at 440 Bedford Street, which would be less expensive and less risky for a builder than converting an entire building. That is one way current lab space could be utilized to some capacity rather than sitting completely vacant.
Finally, the state has identified which businesses it wants to invest in bringing to Massachusetts. Digital health, clean energy, artificial intelligence, and advanced manufacturing are some of the industries the state is targeting.
Not every industry is right for Lexington, though, Iyer explained.
“From our perspective, data centers can occupy the space easily, but are they creating real jobs? Real value to the community? That is always questioned,” she said. “The space may be occupied but there might only be 10 people in there.” She said the same about bringing warehouses for large companies such as Amazon to town.
The town is also marketing itself to the defense industry. Because Lexington already hosts MIT’s Lincoln Lab and part of Hanscom Airfield, it is appealing in that market.
The life sciences industry is still on the list of industries the state would like to invest in, however. As opposed to data centers or warehouses, lab space brings in a lot of jobs and would generate significant commercial tax revenue, Iyer explained.
Asked whether there is hope for the life sciences industry in sight, Sandeen pointed the Observer to a non-residential development report by Karl F. Seidman Consulting Services, a Concord-based economic development consulting service, conducted for Lexington.
The report states there likely won’t be any more life science development in Lexington in at least the next five years.
Lexington Planning Director Abigail McCabe made a similar argument.
“I don’t think it’s coming back in the near future,” she told the Observer. McCabe noted how two different applicants were working with the town in 2022 to build lab space but have since backed out.
Iyer’s thoughts largely echo the findings in the Seidman report. She reflected on when Takeda came to town years ago and turned multiple parcels of land into one large campus for its office space.
“If I actually looked at my crystal ball, that kind of development, like a Takeda development, even in Massachusetts — I don’t think that’s going to happen anytime soon,” she said. “That kind of big life sciences lab space is going to be hard.”
Select Board member Mark Sandeen hides from the public the key, immediate consequence of high vacancy rates in our commercial buildings: taxes on residents are rising more than usual.
The taxes the Town collects increase each year by a fixed 2.5% per “Prop 2 1/2” when there is no operating override or debt exclusion. Therefore, high vacancy rates in commercial buildings, which translate into lower income for those property owners, therefore in lower assessments for those properties, result automatically and immediately in higher taxes for us, Lexington residents, since residential assessments keep increasing (because of the reputation of our schools).
Most recently (per the Nov 2025 Tax Classification package https://www.lexingtonma.gov/DocumentCenter/View/15477/FY2026-Classification-Packet-11102025), residential assessments increased by 4.94% in one year (page 8 of 12 of the packet) while commercial and industrial assessments decreased by 4.35% in that same year (FY26 vs. FY25).
That is why we, residents, will pay almost 5% more in taxes next year, double the +2.5% one would expect.
In the model I developed because the Town has not done it (https://docs.google.com/spreadsheets/d/1SaRJxW_jGMUfFGnfg9bLutwuot0aKyjV/edit?usp=sharing&ouid=116971253884586510151&rtpof=true&sd=true), you can pick in the 2 green cells rates of increase/decrease for commercial and residential assessments, to see in its orange cells how taxes on a single-family house will change as a result (again, assuming no operating override or debt exclusion which would make the tax increase larger).
Our Town leaders, including Mark Sandeen, should give us us clear, meaningful information, not platitudes like “[a high vacancy rate] is a loss in the sense that there isn’t a functioning business there.” — equivalent to “the earth is round, not flat”…
Well done article, showing how Lexington is working to support businesses. Probably out of scope, but the state needs to do more to attract and retain highly trained workers, rather than lose them to other states and countries. They have helped with commercial to residential conversions, but that is a secondary relief needed to bring more jobs here.