Boston Business Journal: "Schering-Plough doubles its space in Cambridge"

Copyright: Boston Business Journal 
July 7, 2006 
by Michelle Hillman 
Journal staff

EAST CAMBRIDGE -- Since arriving here six months ago, Schering-Plough Research Institute has doubled in size, leasing almost an entire building.

The New Jersey-based drug research and development company on June 30 signed a lease for another 64,000 square feet at 320 Bent St., bringing the total amount of lab space leased to about 135,000 square feet. Last November, the institute, the research arm of Schering- Plough Corp. (NYSE: SGP), signed a lease for about 71,000 square feet with the building's owner, Lyme Properties LLC.

Schering-Plough originally leased 71,000 square feet to accommodate employees from NeoGenesis Pharmaceuticals Inc., a company it acquired last January. At the time, NeoGenesis leased 30,000 square feet of space at 840 Memorial Drive. The latest lease is for space in the basement and third floor. Both leases were signed for 10 years, said Robert Green, chief operating officer at Lyme Properties.

"The new lease will give us the opportunity to further expand our research presence in the scientifically exciting Boston area," Stephen Galpin, company spokesman. Galpin said researchers will move in by the end of the year.

Schering-Plough's rents were not disclosed, but asking rents for Class A lab space in East Cambridge are above $50 per square foot with tenant improvement allowances at about $100 per square foot, said Green. Rents could exceed $60 per square foot by the end of the year, according to real estate executives.

"In the market today, there just aren't any 70,000-square-foot chunks of space available," said Green. "Landlords who have space in Kendall Square are looking for rents in excess of $50 per square foot."

The lack of lab space combined with demand from life science and pharmaceutical companies looking to expand or locate operations in East Cambridge has pushed rents back to levels achieved five years ago when the lab market rents peaked, said Steve Purpura, a partner at Richards Barry Joyce & Partners LLC, which has the leasing assignment at 320 Bent St.

Schering will occupy nearly the entire building, leasing the basement, first, second and third floors. The fourth floor is leased to Microbia Inc., which is currently in search of 70,000 square feet of lab space. Should Microbia decide to move out, Schering-Plough has expansion rights to lease its space on the fourth floor, said Green. Microbia's lease at 320 Bent St. expires in December 2007.

Though there are a number of tenants in the market for 30,000 to 40,000 square feet of lab space, there aren't many viable options, said Green. The only space available is about 68,000 square feet at One Hampshire St., where a letter of intent is close to being signed with a joint venture of DSM Biologics BV and Dutch biotechnology company Crucell NV, according to sources. The joint venture is planning to open a 30,000- to 40,000-square-foot research and development center in East Cambridge by the end of the year. If signed, that deal could would leave, at most, 30,000 square feet of space at One Hampshire.

Besides One Hampshire, there is 180,000 square feet of sublease space available at 640 Memorial Drive that Millennium Pharmaceuticals Inc. has been unable to unload for several years.
Schering-Plough Corp.

What the company does: Global science-based health care company with prescription, consumer and animal health products. Employees: 32,600 companywide, at least 70 in Massachusetts. Revenue: $9.51 billion Address: 2000 Galloping Hill Road, Kenilworth, NJ 07033 Web: www.schering-plough.com

Michelle Hillman can be reached at mhillman@bizjournals.com.

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