Boston Globe - March 1, 2008

Cambridge biotech firms departing city for suburbs
Boston Globe

As the epicenter of biotechnology in Massachusetts, Cambridge is home to top university researchers and scores of companies, including Genzyme Corp., Biogen Idec Inc., and Vertex Pharmaceuticals Inc. But as lab space in the city becomes increasingly scarce and expensive, several biotech companies have recently taken flight to the suburbs.

Cambridge-based Shire Human Genetic Therapies last month said it will move its headquarters and many of its 675 local employees to the site of the former Raytheon Co. headquarters in Lexington. Altus Pharmaceuticals Inc., which has 160 workers, plans to move its headquarters to a Waltham office park this summer. And several smaller biotech companies, such as ImmunoGen Inc., WMR BioMedical Inc., Magen Biosciences, and Microbia PE Inc., all recently decided to move their operations from Cambridge to nearby towns, according to real estate firm Colliers Meredith & Grew.

In a sense, Cambridge may be a victim of its own success. Many biotech executives have long insisted on planting their flags in Cambridge, so they could be close to other biotech companies and prestigious academic institutions, like the Massachusetts Institute of Technology, that provide a steady stream of talent and potential partners. But as the industry has boomed, real estate developers have struggled to keep up with the demand, even though the amount of lab space in Cambridge has more than doubled since 2000. As a result, rents have doubled and vacancy rates have shriveled by two-thirds in the past four years.

In the suburbs, lab space costs about $27 per square foot, compared with $59 in Cambridge, giving companies a strong incentive to move.

"It's a substantial amount of savings," said Dan Cordeau, senior vice president of Jones Lang LaSalle, a commercial real estate agency. Biotech companies "don't all have to be in Cambridge," he added.

In addition to the cost, some midsize and larger companies say they are increasingly having trouble finding blocks of prime office and lab space large enough to accommodate all their workers at one site, making it more cumbersome to conduct business. Altus, which is developing a drug to treat cystic fibrosis, has four locations in Cambridge, but says it can consolidate its campus in Waltham.

"It's very important for us to get everyone under one roof and be able to give them first-class facilities," said John Jordan, Altus spokesman.

Lab space could become even more of an issue if Governor Deval Patrick's life sciences initiative, which was approved by the state House of Representatives on Thursday and is now being considered in the Senate, spurs existing companies to expand, and attracts more business to Massachusetts.

Shire HGT also said it would have been difficult to find enough space in Cambridge. The company, a unit of British drug maker Shire PLC, has 675 employees in Massachusetts, but plans to double that in the next eight years. By moving to Lexington, Shire HGT senior vice president William Ciambrone said, the company will be able to "grow the entire organization in one contiguous space." Shire also cited the lower costs of being in Lexington.

That's largely because companies have more options and real estate is cheaper outside of Boston and Cambridge - vacancy rates average 20 percent in the suburbs, compared with 7 percent in Cambridge and 2 percent in Boston, according to commercial real estate firm Richards Barry Joyce & Partners. Parking and developing new buildings can also be more challenging in urban areas.

The Cambridge space crunch is forcing other companies to consider moving as well, including Vertex, one of the state's best known biotech companies, and Amag Pharmaceuticals Inc., which is seeking federal approval to market a treatment for patients with chronic kidney disease. Amag spokeswoman Kristen Galfetti said the firm has been scouting sites in Lexington and Waltham in addition to Cambridge. The company wants to double the size of its headquarters to 50,000 square feet, she said.

Vertex, meanwhile, is considering building or leasing a new campus for its growing workforce. While Vertex executives say they have not decided whether to leave Cambridge, the company has reportedly been looking at moving to Boston's Fan Pier area.

Other Cambridge companies plan to keep their headquarters in the city, but have moved or expanded some operations in the suburbs. For instance, Genzyme recently decided to build a $260 million drug manufacturing plant in Framingham, at a 14-building complex that includes a large research center and a small manufacturing plant. Genzyme, which mainly develops expensive drugs to treat rare diseases, has had a presence in Framingham since it bought a small biotech company there in 1989, and has gradually expanded the operations. It now has 4,500 employees statewide, including 1,330 in Cambridge and 1,800 in Framingham.

"We've had more people in Framingham for many years," said Genzyme senior vice president Mark Bamforth.

Yet Cambridge still has more cachet than the suburbs, and some companies are willing to cope with the downsides.

James Mullen, Biogen Idec chief executive, said the company has no plans to move its research or headquarters operations out of Cambridge. Biogen Idec, which makes drugs to combat multiple sclerosis and other diseases, has 1,750 employees in Massachusetts, including 1,575 in Cambridge.

"We've concluded we really need to be right there in the heart of the city," Mullen said in an interview last month. "There's a huge labor pool in Cambridge."

And as Shire, Altus, and other companies give up space, biotech industry officials say start-ups and small growing companies are ready to fill the void.

"It's a good thing," said Robert Coughlin, president of the Massachusetts Biotechnology Council in Cambridge, of the larger companies' migration to the suburbs. "It's positive for smaller companies that want to be here, but can't find space."