by Nathan Collins
Despite the departure of Akamai Technologies from Technology Square, the properties appear to have been a good investment for MIT.
“We’ve had a fairly successful leasing effort,” said MIT Real Estate Director Joseph T. Maguire. MIT is continuing to lease space three of the seven Tech Square buildings, but has filled Buildings 100, 200, 400, and 700. Tech Square comprises about 1.1 million square feet of rentable space, Maguire said.
Delta Search Laboratories will now occupy Building 700, and Swiss pharmaceutical company Novartis will move into Building 100 when construction is completed. “The shells are all complete,” said Maguire, but the buildings must be finished before they can be occupied.
Biotechnology space, which makes up most of Tech Square, is one of the few real estate markets doing well right now. “You saw the Novartis lease at Necco,” said Adjunct Professor Emeritus William J. Poorvu of the Harvard Business School. “There are leases in biotech [and] you won’t find many other” leases in the technology real estate.
Poorvu said that investments such as Tech Square can bring jobs for a school’s students and activity for its faculty in addition to financial gain. Such investments are also quite common. Princeton, Stanford, and Yale all own similar technology or science real estate, Poorvu said.
Maguire said that MIT has focused on biotechnology, and that “rents are significantly higher” in the biotech industry. Poorvu said that rents were “certainly higher for biotech than other kinds of space,” but he said that biotech companies often require more expensive buildings.
Akamai Technologies, which occupied building 500 and leased building 600, announced in a March 2002 press release that it would leave Tech Square. Akamai terminated its lease with a $15 million payment to MIT, releasing it “from a total lease liability of over $110 million,” according to an Akamai press release.
Akamai, which has leased nearby Eight Cambridge Center, had leased Building 500 through 2007 and Building 600 through 2012, said Caryn Brownell, a press relations representative for Akamai. “We saw an excellent opportunity to relocate and significantly lower our operating costs,” Brownell said.
Akamai President Paul Sagan estimated savings of “$8-10 million annually,” according to the March press release.
“It turned out to be win-win,” said Maguire. “It also gave MIT a significant amount of income.”
Neither building that Akamai leased have been completely leased yet, but “we are working feverishly to get [the Institute for Soldier Nanotechnology] and Bioengineering into Building 500,” and fitness company FitCorp will move from its present space in the basement of building 500 to the first floor of 600.
In addition to a variety of high-technology and biotechnology firms at Tech Square, Building 600 houses a Kinko’s, and there are plans for a restaraunt in Building 300.
Maguire said “we are hopeful to have a new restaraunt ... we have a letter of intent.” Maguire said the restaraunt would be “white linen” and take up about 10,000 square feet.
Maguire said that including such businesses is part of their master plan, which includes an effort to attract more community activity. “We liked the Beacon plan,” he said, and “will continue to work with the original architects,” Sasaki and Perkins, Will, and Shaw.
MIT is “committed to continuing our work ... as a responsible member of the community," said MIT Executive Vice President John Curry in a January 2001 statement.
MIT acquired Technology Square from Beacon Capital Partners in February 2001 for $278.8 million, according to a Beacon statement. The 2001 MIT Treasurer’s Report indicates $289 million in real estate acquisitions.
Beacon also sold the Draper Laboratories building to Draper Labs in April 2000 for $72.5 million, the statement said. Beacon bought both the Draper building and Technology Square from Prudential Insurance Company of America in 1998 for $123 million, an earlier Beacon statement said.