Rents soar as health companies bloom
Looking at some data, firing off some e-mails, and making some phone calls to understand what’s shaking in the local innovation economy as we head into the first full work week of March . . .
To understand Boston’s shift from a tech-driven town to one focused on health care, all you need to do is look at last year’s tallies of venture capital investment in Massachusetts companies. According to a database compiled by PwC and CB Insights, $6 billion worth of new funding went into health care-related companies last year, and $3.7 billion poured into tech companies. Sounds healthy on both sides, until you look back at 2000 — the height of the Internet boom — when fast-growing tech companies attracted $6.6 billion, and their health care counterparts just $1.1 billion.
Over less than two decades, we’ve seen a big shift in where investors see opportunities. Biotech rules.
On funding, I often hear entrepreneurs complain about not enough money being available to help them start their businesses. But according to that same data set, there has been a 50 percent increase in the total “seed” and “early stage” funding supplied to Massachusetts companies over the last three years. (Think of this as support in the infant and toddler years, typically before a company is profitable and chalking up major revenue.) In 2015, early funding totaled $1.6 billion across all business sectors; last year it was up to $2.4 billion, a record.
All that money, combined with the fact that most biotech companies want to be located in or near Kendall Square, has led to record rents. Two real estate watchers say that some Cambridge rents are edging into the stratosphere.
“We’re seeing office leases north of $100 per square foot for existing and new construction,” says David Townsend, executive managing director at the commercial real estate firm Newmark Knight Frank. “It’s just a function of extreme scarcity in Cambridge. There less than 1 percent vacancy in the lab space market, and office space is under 5 percent.”
Aside from a big expansion that was announced by Google last month, Townsend notes that many companies looking for big chunks of space in town are biotechs such as Foundation Medicine (cancer treatments) and Sage Therapeutics (drugs for psychiatric disorders like postpartum depression.)
Where’s the cheap space?
“You can find value options north of Boston along Route 128, in Woburn, Salem, Wakefield,” writes Liz Berthelette, research director at the Boston real estate firm Hunneman, via e-mail. What constitutes “value”? The range of $15 to $20 per square foot, she says. South of the city, Berthelette says, in areas like Quincy and Braintree, you can lease office space for about $20 per square foot.
Titles in demand
I asked three of the best-networked recruiters I know what job titles are in especially high demand in 2019. In the tech space: VP of customer success (making sure customers are happy with your product), chief revenue officer (overseeing sales), VP of customer experience (ensuring that customers are happy, whether their interactions with you are digital or not), cybersecurity engineer, machine learning engineer, robotics scientist, and chief information security officer (making sure the data are safe and keeping hackers at bay).
In the life-sciences sector, coveted job titles include director of digital health (using software to help manage health), cell engineering scientist, computational biologist (leveraging technology to get insights that help lead to successful drugs), and managers with manufacturing expertise — especially in the cell therapy or gene therapy fields.
Thanks to John Barrett, Beverly Kahn, and Pearl Freier for filling me in.
In his second term, Governor Charlie Baker seems unlikely to lay out a lofty vision for economic development as his predecessor, Deval Patrick, did with his major investment in the life-sciences industry. But that’s probably OK. Increasing the availability of affordable housing and providing reliable public transportation are both high priorities that come up anytime I ask entrepreneurs what the state should be doing.
Worth checking out
Two events that really brought the community together seem to have petered out: WebInno, once held quarterly in Cambridge and run by the venture capitalist David Beisel, and the annual Innovation Unconference, run by the Massachusetts Technology Leadership Council. I miss them both.
But others are still going strong, and are worth checking out.
The Boston New Technology Meetup has a gathering on March 18 that will focus on blockchain and financial services-related startups.
Mass Innovation Nights is a monthly showcase of new products; the next is March 14 at Brandeis University. The Venture Café in Cambridge has a networking and learning gathering every Thursday, but often holds mini-conferences, as well. March 28 is SheConnects, geared to women entrepreneurs.
And among the best-kept secrets in Boston are the conferences that MIT and Harvard Business School students organize during the academic year, which often attract world-class speakers.
(Online, search either “HBS student conferences” or “MIT Sloan student conferences.”)
Coming up in March: MIT conferences on private space activity, and an HBS conference on real estate development.
How low will GE go?
GE was the only Massachusetts-based company to occupy a “top 50” slot on the most recent Fortune 500 list, which ranks companies by total revenue. It showed up at 18, right after the grocery chain Kroger and one spot ahead of Walgreens. But as GE keeps selling off parts of its empire — most recently, its biopharma business — to become more nimble, how far will it drop? The new list is out in May.
Hello, Netflix (and Walmart)
Two companies I’m surprised haven’t opened tech offices in Boston: Netflix and Walmart. Walmart has a big presence in Hoboken, N.J., thanks to its 2016 acquisition of the e-commerce site Jet.com, and Netflix has an office in Manhattan. I’d put money on one of them being in Boston by this time next year.