Cambridge, eager to preserve Kendall Square as a hothouse of innovation, is poised to become the first community in the country to require commercial developers to set aside lower-cost offices for start-up companies and budding entrepreneurs.
The move is prompted by growing concerns that Kendall is fast becoming a victim of its own success. Increasingly the small, cutting-edge start-ups that give the neighborhood its vibe and cachet are being forced out by skyrocketing rents as more big technology and drug companies claim the little available office space there.
“We face the challenge of Kendall Square being loved to death,” said Brian Murphy, assistant city manager for community development. It’s one of the “healthiest and most vibrant economies in the country, if not the world,” he said. “And we need space, and room to grow.”
The first step was on Monday when city officials approved a massive redevelopment plan by the Massachusetts Institute of Technology to build some 1 million square feet of offices, labs, apartments, and retail on its vast property holdings in Kendall. MIT is required to set aside 5 percent of any new construction for so-called innovation office space, which will offer flexible lease terms, lower office rents, and amenities such as shared Wi-Fi service to qualifying start-ups.
And city officials said they expect to soon follow through and apply the 5 percent set aside to every commercial property owner that wants to build in Kendall.
“We want to stretch it to all of Kendall Square,” said Cambridge City Councilor Leland Cheung, a vocal proponent of the requirement. “When these larger companies come in, they are taking up larger footprints. We want to make sure that we preserve space for entrepreneurs going forward to ensure we maintain a dynamic environment.”
Already MIT has promised to double what even Cambridge wants — reserving a minimum of 10 percent of its new developments for those young businesses.
‘We want to make sure that we preserve space for entrepreneurs going forward to ensure we maintain a dynamic environment.’
MIT officials said the innovation spaces in its first new buildings will range in size, from a tiny 200 square feet to as much as 5,000 square feet.
The requirement is hardly onerous for MIT. The school already owns buildings in the area that house some of Kendall’s existing workspace for start-ups, such as the Cambridge Innovation Center. Moreover, each year the school graduates promising entrepreneurs who face the challenge of starting a new business here, or moving to a lower-cost region.
“That mix is really important to us,” said Steve Marsh, MIT’s managing director of real estate. “We think it’s the special sauce.”
MIT’s new building plans won’t begin for some time, and the work is expected to unfurl in phases over the next decade. Cambridge also approved zoning changes to allow MIT to build bigger, taller projects in the area.
The other major commercial property developers in the area are harder to read, and several did not return calls for comment.
However, Cambridge officials say they will try to make the Kendall-wide set aside more palatable for developers by exempting the start-up space from the total amount of new construction developers would be allowed under city zoning. That would help owners build a little more market-rate space to offset the lower revenues they would receive from start-up tenants.
Without those conditions, the zoning set-aside for start-ups would be viewed as more burdensome, said David Begelfer, chief executive officer of NAIOP Massachusetts, which represents commercial property owners in the state.
“It seems like a reasonable bargain,” Begelfer said. Plus, he pointed out those small tenants could eventually grow into the future residents of the market-rate commercial spaces in the area.
Over the past decade, Kendall has grown from an insular neighborhood of research laboratories, drug makers, and a few of software firms to a mecca for techies, and now counts hundreds of budding high-tech and science companies and deep-pocketed venture capital firms.
That buzz, as well as Kendall’s proximity to MIT and Harvard University, has attracted some of the biggest names in the computer and pharmaceutical industries.
With available space precious, office rents are soaring to among the expensive in the country, forcing many young start-ups to search out cheaper rents elsewhere in Cambridge or across the Charles River in Boston.
Cheung and others say it is crucial for Kendall to maintain that mix — the small lab next to big pharma, the mobile app developer near the computer industry standard-bearer — and to ensure there will always space for the next smart MIT graduate looking to launch a new venture.
“There’s this hive mind in the neighborhood,” said Tim Rowe, president of the Kendall Square Association, likening the interaction around MIT and Kendall Square to a beehive, with entrepreneurs running into each other at cafes or venture capitalists making deals over coffee or drinks.
“You can’t run across the street without running into people,” he said. “The key resource that we’re short on right now is just space.”