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Islands of economic growth

Seaport and Kendall Square are hotbeds for development, defying a gloomy economy

Richard Bertonchini worked on a $70 million, 120,000-square-foot lab facility being built by Skanska in Kendall Square, where tech and biotech firms are a draw for other companies.
Richard Bertonchini worked on a $70 million, 120,000-square-foot lab facility being built by Skanska in Kendall Square, where tech and biotech firms are a draw for other companies. Dina Rudick/Globe Staff

Through depressing economic statistics, wildly fluctuating stock prices, and never-ending talk of another recession, Boston’s Seaport District and Cambridge’s Kendall Square have continued to charge ahead, generating huge amounts of investment as many other commercial areas struggle.

More than $1 billion is pouring into the neighborhoods as technology, biotechnology, alternative energy, and other firms relocate, start up, and grow in these centers of the state’s economy. Office towers are rising, research labs expanding, restaurants sprouting, and companies hiring.

Kendall Square and the Seaport District are on the upside of turbulent economic times drawing sharp distinctions between haves and have nots, as investors and real estate developers place bets in the safest, most desirable ZIP codes to improve chances for positive returns. These areas have achieved what economic development specialists call critical mass, a threshold level of innovative companies and skilled workers that makes other firms and workers want to be there, too.

In other words, the rich get richer.

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“Companies want that feeling of vibrancy,’’ said Steve Purpura, a partner with the real estate firm Richards Barry Joyce & Partners. “They want to be part of the exchange of ideas that is driving the growth of these areas.’’

For example, Skanska USA Commercial Development is building a $70 million, 120,000-square-foot laboratory facility in Kendall Square. Shawn Hurley, executive vice president for Skanksa, cited these reasons for investing there: transit access, top research institutions and universities, and a community of start-ups and biomedical giants that is generating jobs to fill new office and lab space.

“In evaluating the Greater Boston area,’’ said Hurley, “we felt East Cambridge had a strong story to tell.’’

Similar forces are at work in Boston’s Seaport, a once-barren industrial area Boston Mayor Thomas M. Menino renamed the Innovation District in hopes of luring technology and medical firms that have long powered the region’s economy.

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Dozens of companies such as Fama PR Inc. and the advertising firm Allen & Gerritsen have moved there in the last two years, and developers have followed with proposals for new projects, convinced the area is no longer a risky place to invest.

The Seaport is now hosting one of the largest privately funded construction projects in the nation - an $800 million office complex for Vertex Pharmaceuticals Inc. The company committed to move to the Seaport from Cambridge after it received federal approval of a treatment for hepatitis C; it recently began seeking approval of a second drug, to treat cystic fibrosis.

Nearby, several new restaurants, such as Strega Waterfront, Legal Harborside, and Del Frisco’s Double Eagle Steak House, are thriving and developers are promising within months to begin building hundreds of new apartments and retail stores on massive parking lots that still cover much of the district. Those projects are planned at Pier 4, along Congress Street near the Boston Convention & Exhibition Center, and at Seaport Square, on property across from the John Joseph Moakley US Courthouse.

“The area has an edginess to it that can be very appealing,’’ said Bill Motley, a managing director with real estate firm Jones Lang LaSalle. “The Seaport used to be a [lower] price alternative to downtown, but the decision to move there isn’t as much about price; it’s about quality of life and image.’’

These successes didn’t happen overnight. The recent development spurt in the Seaport District is the result of decades of work and massive government investment, including the extension of the Massachusetts Turnpike to the area and construction of the MBTA’s Silver Line tunnel to provide access to the neighborhood.

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Then came the challenge of attracting companies to what was at first a new, untested neighborhood and the process of permitting redevelopment projects through a thicket of often competing government and private interests

Kendall Square took some 40 years to develop - overcoming, among other obstacles, an unrealized urban renewal project that left much of the neighborhood flattened. Today, the neighborhood is in the middle of a period of strong growth expected to result in 5 million square feet of development within the next decade, according to commercial real estate specialists.

Several biotech firms and research institutions are committed to expanding there: Pfizer Inc. is planning a 180,000-square-foot facility on Main Street; Novartis AG is seeking to begin construction on a new building in the shadows of the Massachusetts Institute of Technology; and the Broad Institute, a research organization founded by Harvard University and MIT, is building a 250,000-square-foot building with research and office space on Ames Street.

A little more than a week ago, Alexandria Real Estate Equities Inc. of California formally started construction of a $500 million complex of seven buildings in Kendall Square that will result in 1.7 million square feet of new office, lab, residential, and retail space. Biogen Idec Inc., which is returning its executive offices to Cambridge after a hiatus in Weston, will occupy the first building in the complex.

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Gregory Bialecki, Governor Deval Patrick’s top economic development aide, said the state has invested heavily in Kendall Square and the Seaport because they are incubators of talent and economic growth. The administration’s support has come through a range of initiatives, including a $1 billion program of tax breaks and incentives for the biotechnology industry.

The administration provided $60 million in tax credits and funding for road work and other upgrades to help Vertex move to the waterfront.

“Just that one expansion will grow tax revenues that will not only pay us back for the infrastructure investment, but will put more money in the [state’s] general fund,’’ he said. “It will also help create a critical mass of innovation activity that is definitely going to have a ripple effect and increase the number of new businesses in that neighborhood.’’


Casey Ross can be reached at cross@globe.com.