MIT Benefits from Tech SquareBy Nathan Collins
Despite the departure of Akamai Technologies from Technology Square, a number of businesses and MIT departments are moving in to the recently acquired MIT property, and the investment appears to have been a good one.
“We’ve had a fairly successful leasing effort,” said MIT Real Estate Director Joseph T. Maguire. MIT is continuing to lease space in three of the seven Tech Square buildings. 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 fill all of Building 100 when construction is completed. “The shells are all complete,” Maguire said, but the buildings must be finished before they can be occupied.
MIT departments relocate
Several MIT departments will move to Technology Square in the next year or so.
“We are working feverishly to get [the Institute for Soldier Nanotechnology] and Bioengineering into Building 500,” Maguire said. Akamai Technologies currently occupies Building 500.
Professor Edwin L. Thomas, ISN director, said that he is hoping to move in next spring and that ISN would occupy two floors and about 26,000 square feet. MIT Managing Real Estate Director Steven Marsh said that MIT would take up about four floors in Building 500.
But the Laboratory for Computer Science, currently occupying building 200, plans to move to the new Stata Center in 2004. Marsh said that MIT is working on leasing space in the current LCS building in addition to two buildings formerly leased by Akamai Technologies and Building 300.
MIT real estate benefits many
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 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.
“We invest in real estate because it’s a good investment,” Marsh said. “Harvard does it, Yale does it ... MIT has chosen to invest in Cambridge, principally because we like the market.”
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.
“In today’s market, biotech is more profitable than office space,” Marsh said. But, he added, biotechnology is also riskier and the real estate is more expensive to develop.
Akamai leaves Tech Square
Akamai Technologies, which currently has its headquarters in Building 500 and had leased Building 600, announced in March 2002 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 statement.
Akamai, which has leased nearby Eight Cambridge Center, had leased Building 500 through 2007 and Building 600 through 2012, said Caryn Brownell, an Akamai spokesperson. “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 statement.
“It turned out to be win-win,” Maguire said. “It also gave MIT a significant amount of income.”
Restaurant may be new addition
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 restaurant in Building 300. Fitness company FitCorp currently occupies the basement of Building 500 and will move to the first floor of 600, opening in November.
“We are hopeful to have a new restaurant. ... we have a letter of intent,” said Maguire. He said the restaurant would be “white linen” and take up about 10,000 square feet.
“The reason people come to Cambridge is they want to interact,” and retail businesses facilitate that interaction, Marsh said.
Maguire said that including such businesses was part of the original plan. “We liked the Beacon [Capital Partners] plan,” he said, and “will continue to work with the original architects,” Sasaki and Perkins, Will, and Shaw. Beacon Capital Partners previously owned Tech Square.
MIT spent $278M on Tech Square
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.
Marsh did not know the source of the extra $10 million in acquisitions, but said that MIT frequently buys small properties that could make up the difference.
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. Beacon made significant renovations prior to selling the property to MIT.
MIT owns several similar commercial properties in Cambridge, including One Broadway, near Kendall Square, and University Park.