METRO BOSTON Q BIOTECH REPORT 3.9% 257,764 $ ,781, Congress Street Boston, MA

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1 METRO BOSTON 218 BIOTECH REPORT ABSORPTION ASKING RENT ($/SF) UNDER CONSTRUCTION 3.9% 257,764 $45. 1,781, Congress Street Boston, MA

2 BOSTON 218 / SUBURBAN LAB ABSORPTION ABSORPTION Boston 5,75, , % 86,379 86,379 Suburban 7,623,62 75, % 182, ,371 13,329, , % 268,75 268,75 ABSORPTION SF (s) Boston Suburbs FUTURE SUPPLY TRENDS Biotech firms continue cluster to outside of Cambridge; benefiting from demand for space in relief valve markets like Watertown, Waltham, Bedford, and Brighton. First quarter net absorption totaled roughly 269, square feet in Boston and the Suburbs combined, and vacancies declined to 7.3%. The future remains bright for life science hubs outside of Cambridge as demand for lab space far outstrips supply. While tenant preferences will remain focused on Kendall Square, the lack of space and frothy pricing will push growth out along Route 2 and the Route 128 Corridor. Longwood Center, the newest lab building in the Longwood Medical Area, is now fully-occupied just three years after delivery. Dana-Farber Cancer Institute expanded into another 83,55 square feet this quarter; now occupying more than half of the building. There are only a handful of large blocks of space left in the Boston Lab market, with 8 Guest Street and 27 Drydock Avenue boasting the only availabilities above 3, square feet. 144,4 SF NOTABLE TRANSACTIONS Dana-Farber Kala Pharmaceuticals Visterra Aileron Available Leased 214,91 SF Drug manufacturing operations are moving to suburban locales with accessibility to R&D operations in Cambridge. High costs and a non-existent inventory have led firms such as Alnylam and Moderna to establish manufacturing facilities in the Route 128 Corridor. Activity is moving further out to the Route 495 area as well. LakePharma, Inc. recently acquired 35 South Street in Hopkinton and plans to launch a 69,-square-foot GMP manufacturing facility in the building. King Street Properties is throwing its hat into the ring as well. The Cambridge-based life science real estate owner purchased the former headquarters of the MetroWest Daily News on New York Avenue in Framingham, and is planning to create a life science hub at the site, which could include manufacturing space. Expect this trend to continue as scientists and other R&D employees seek direct access to production operations. Tenants are flocking to the Route 128 West Submarket. With the addition of two new tenants, the LINX in Watertown is fully leased up. Aileron signed a lease for 18,69 square feet, and Kala Pharmaceutics is taking down more than 66, square feet in the building. The former is relocating from Waltham, and the latter is moving in from Cambridge. Visterra is also making the jump from Cambridge as the biotech company has outgrown its Kendall Square facility. Visterra executed a lease for 27, square feet at a recently converted lab building on Second Avenue in Waltham. 2 MicroMedicine 1K SF 3K SF Route 128 West 5K SF Boston 7K SF 9K SF The area s IPO and venture funding landscape remains solid. Boston-based restorbio recently raised $85 million in its initial public offering, and Bedfordbased Homology Medicine filed a $144 million IPO in March. Regarding venture capital, Finch ($36 million), Partner ($6 million), and Stoke ($4 million) were among several companies located outside of Cambridge that raised funds in the first quarter.

3 EAST CAMBRIDGE LAB ABSORPTION ABSORPTION East Cambridge 9,311,288 48,444.5% (3,391) (3,391) TRENDS Vacancies in Cambridge s premiere lab market are still essentially zero. Although rates inched up to.5% in the first quarter of 218, there is less than 5, square feet of vacant space in East Cambridge. As has been the trend over the last two years, any available space is quickly leased up here in many cases through off-market deals. There doesn t seem to be any clouds in East Cambridge s forecast. Expect tenants to struggle to find space to accommodate their growth as tight fundamentals and higher rents will continue to characterize this market in the nearterm. While overall rent growth has slowed, lease rates on higher-end space are now in the low-$9s on a per-square-foot basis. Space is leasing up faster than it can be built. Alexandria Real Estate s 164,-square-foot speculative project at 399 Binney Street is almost fully-occupied. Relay and Cellular Ecosystems will join Rubius once the new facility delivers at the end of this year; bringing occupancy to more than 83%. Reportedly a fourth tenant has signed an LOI, which would make the building 1% occupied. Tenants are paying top dollar for this space with base rents in the lowto-mid $8/SF, and TI allowances are roughly $2/SF. Alexandria s 431,5-squarefoot 1 Binney Street will delivery completely full in the second quarter. While an office user, Philips North America, plans to occupy 8% of the first phase of DivoWest s Cambridge Crossing development, the building is lab-capable and the remaining space is being marketed towards lab tenants. Lab users are hiring. Alnylam is looking to grow its employee base, particularly in East Cambridge. The pharmaceutical company plans to add up to 2 additional employees in the near term and grow its global workforce to 1,25-1,5 by 22. Gene-editing biotech, Editas Medicine, has also been boosting headcount as it prepares to launch U.S. clinical trials. Local labor markets are tighter-than-ever, especially for highly-skilled research personnel, but increasing headcounts bodes well for future lab demand. SF (s) CONSTRUCTION TRENDS Construction Trends SF (s) NOTABLE TRANSACTIONS Net Absorption Vacancy Leased Available Notable Transactions 1% 8% 6% 4% 2% % Takeda Pharmaceuticals potential takeover of Shire may make waves in the local lab market. While there is little overlap in real estate footprints between the two companies, there could be some fallout if the deal were to move forward. In addition to its large presence in Lexington, Shire has re-established its Kendall Square presence within the past year. The pharmaceutical giant inked a deal for 343, square feet at 5 Kendall Street and subleased 223, square feet at 125 Binney Street. Takeda maintains a presence at 35 Landsdowne Street in Mid Cambridge, occupying the entire 22,-square-foot building. Relay Cellular Ecosystems Gemini Eli Lilly & Co. Avrobio Funding momentum is strong among East Cambridge life science companies. Surface Oncology and Solid Biosciences raised $1 million and $153 million in their initial public offerings, respectively. Several major VC investments took place this quarter as well. Moderna raised a whopping $5 million, while Generation Bio and TCR2 both raised $1 million or more in the first quarter. 1K SF 2K SF 3K SF 4K SF 5K SF 3

4 218 KEY: VC FUNDING BY CITY $1.3 B - $1.72 B $21 M - $1.3 B $7 M - $21 M $2 M - $7 M - $2 M LIFE SCIEN BLOOM MOR SINCE REACH FD DR APPR (21 4

5 CE FUNDING BERG MASS LIFE SCIENCE INDEX E THAN DOUBLED BOTTOMING IN EARLY 212; ING A PEAK IN EARLY 218. A UG OVALS 1-217) FROM MASSACHUSETTS COMPANIES $4.5 $4. $3.5 $3. $2.5 $2. $1.5 $1. $.5 $. FDA DRUG APPROVALS MA VC FUNDING 4% 45% 33% 58% % 65% 67% Life Science Funding Total Funding MA LIFE SCIENCE IPOs $ $2 $4 $6 $8 $1, $1,2 $1,4 $1,6 (In Millions) 5

6 218 MID CAMBRIDGE LAB ABSORPTION ABSORPTION Mid Cambridge 5,262,211 28,19.5% 19,45 19,45 6 Vacancy 25% 2% 15% 1% 5% RENTS 5-Year Historical Average = 8.5% % $9 $8 $7 $6 $5 $4 $3 $2 $1 $ NOTABLE Notable TRANSACTIONS Transactions Abbvie Beam Mersana Voyager Spero 42% Increase K SF 2K SF 3K SF 4K SF 5K SF TRENDS Positive net absorption pushed vacancies down to a paltry.5% in Mid Cambridge; declining by 4 basis points over the quarter and 1 basis points over the year. With a handful of mid-sized leases signed this quarter, there is less than 3, square feet of vacant space in this submarket. Tenants looking to expand here will struggle to find space, especially given that new construction is concentrated elsewhere in Cambridge. While rent growth has slowed, asking rents remained elevated in the mid-to-high-$7/sf. Look for fundamentals to remain tight and higher lease rates in the near-term forecast. Similar to East Cambridge, available space is quickly snapped up in Mid Cambridge. Takeda Pharmaceuticals has been successful in leasing up ARIAD s former space at 26 Landsdowne Street, which is currently under renovation. Most recently, Beam inked a deal for 38,23 square feet in the building. Fulcrum took down 28,731 square feet recently as well. Other major leases signed this quarter include Abbvie s 42,313-square-foot expansion at 2 Sidney Street, Mersana 34,324-square-foot deal at 84 Memorial Drive and Spero extension and expansion at 675 Massachusetts Avenue. Solid IPO activity taking place among Mid Cambridge biotechs over the last months is driving strong leasing. Evelo Biosciences recently filed to raise $1 million and Unum raised $69 million in its initial public offering. Aileron ($73 million), Mersana ($92 million), and Spero ($92 million) have signed leases recently; after filing IPOs last year. Continued IPO activity in the local life science arena ultimately bodes well for future lab demand here. Traditionally a relief valve for nearby East Cambridge, Sidney Street has evolved into a top-tier lab cluster in Mid-Cambridge. Anchored by BioMed Realty s Sidney Research Campus, this corridor is home to 1.1 million square feet of lab space and tenants like Agios Pharmaceuticals, Blueprint Medicines, and Abbvie. As of the first quarter, there was only one availability here. Addgene is subleasing close to 18, square feet at 75 Sidney in anticipation of its move to LINX in Watertown. This represents a marked change from just three years ago when vacancies were in the 3-4% range following Vertex s relocation to the Seaport. Voyager also renewed and expanded by more than 1, square feet in 75 Sidney Street in the first quarter; highlighting the area s desirability among tenants. Rents continue to climb in the Mid Cambridge lab market. Historically there has been a much larger delta between lease rates in this submarket and East Cambridge. As space has become scarce and Mid Cambridge s status has grown, landlords have been able to push through outsized rent gains here. Since the end of 214, average asking rents increased by 42%. While peak growth is likely behind us, look for modest gains in the near future.

7 WEST CAMBRIDGE LAB ABSORPTION ABSORPTION West Cambridge 787,86 72, % - - TRENDS With little leasing or absorption taking place during the first quarter, vacancies remained unchanged, at 9.2%, in the West Cambridge lab market. Much of Cambridge s available lab space is located here, with more than 7, square feet of space currently vacant. The delivery of the 227,-square-foot 35 Cambridgepark Drive will add another large block of space to the available inventory here. With that said, fundamentals remain ultra-tight in both East and Mid Cambridge, and West Cambridge remains a key relief valve for these more established life science hubs. Look for continued movement into the market as space constraints and historically-high rents push tenants out of Cambridge s core lab markets. Celgene continues to expand its presence in the West Cambridge Submarket. Most recently, the biopharmaceutical company leased another 2, square feet at 2 Cambridgepark Drive bringing the firm s occupancy to roughly 127, square feet (more than half of the building). Celgene has also been on a shopping spree recently. Earlier this year the firm acquired Waltham-based Juno for $9 billion, which followed the acquisition of Impact Biomedicines for several billion dollars. Rents continue to climb in the West Cambridge lab market. As lab space has become scarce throughout Cambridge, tenants have been willing to move further out from Core Kendall Square and into this market. As a result, landlords have been able to push through stronger rent gains over the past few years, with lease rates rising by 31% since the end of 214. Despite this growth, rates for space in West Cambridge offer a steep discount compared to neighboring submarkets. Existing lab space boasts a mid-to-high-$5s/sf price tag, while asking rents are in the high $6s/SF at 35 Cambridgepark Drive, which is not included in the current stats. While peak growth is likely behind us, look for modest gains in the near future. While venture capital has been comparatively less active in West Cambridge, a handful of funding events took place over the last several months. Most recently, Cytier raised $29 million in a Series B round, and Ultivue also closed a Series B round; raising $2 million. Late last year, Aura Biosciences raised another $3 million while LifeMine closed a $55 million Series A round. AND ABSORPTION SF (s) ASKING RENTS Asking Rents $6 $5 $4 $3 $2 $1 $ CONTIGUOUS BLOCKS Net Absorption Vacancy 31% Increase % 4% 3% 2% 1% % -1% The majority of Cambridge s construction remains concentrated in East Cambridge, but West Cambridge could see some more action in the future. The Bulfinch Companies is planning to build out the remaining parcel at the Cambridge Discovery Park. The campus can accommodate up to two additional office/lab buildings totaling 25, square feet. 2 K SF 1K SF 2K SF 3K SF 4K SF 7

8 218 M E T R O B O S T O N BIOTECH RECAP UNDER CONSTRUCTION DIRECT SUBLEASE ABSORPTION ABSORPTION BOSTON 5,75, ,4 239,89 22, % 86,379 86,379 East Cambridge 9,311,288 1,195,5 25,439 23,5.5% (3,391) (3,391) Mid Cambridge 5,262,211-28,19 -.5% 19,45 19,45 West Cambridge 787,86 226,885 69,632 3, 9.2% - - CAMBRIDGE 15,361,359 1,422, ,9 26,5 1.% (1,986) (1,986) Route 128 North 1,134,676-32,688 1, % 38,926 38,926 Route 128 Northwest 2,261,21-172,888 18, % - - Route 128 West 2,123, ,91 199,374 6, 9.7% (15,275) (15,275) Route 495 North 849,329-12, % (92,93) (92,93) South 276, % - - West 978,688-82,869 62, % 25,813 25,813 SUBURBAN 7,623,62 144,91 68,521 97, % 182, ,371 MARKET 28,69,727 1,781, ,42 145, % 257, ,764 METHODOLOGY SOURCE: Co-Star, NAI Hunneman Commercial Company. PREPARED: March 218. LIZ BERTHELETTE Director of Research lberthelette@naihunneman.com DISCLAIMER: The above data is from sources deemed to be generally reliable, but no warranty is made as to the accuracy of the data nor its usefulness for any particular purpose. Average Rental Rates are asking rents on direct space. Vacant space includes both direct and sublease space.