Ivanhoé Cambridge to Build a World-Class Life Science Project in Boston

Ivanhoé Cambridge, CDPQ's large real estate subsidiary, announced today that it's teaming up with Lendlease to build a world-class life science project in Boston Landing:

Lendlease, a leading global real estate group, and Ivanhoé Cambridge, global real estate investor, are teaming up to develop a 1.15-acre project featuring a state-of-the-art life science building with world-class amenities, located at 60 Guest Street, a land parcel in the Boston Landing campus in Allston/Brighton, Massachusetts.    

“This project is further evidence of the strength of our integrated platform and end-to-end capabilities,” said Lendlease Americas CEO Denis Hickey. “60 Guest Street demonstrates our global strategic focus on delivering a diverse and robust pipeline of development projects alongside best-in-class capital partners like Ivanhoe Cambridge.”

“This life science development project is perfectly aligned with our investment strategy and vision, as we continue to invest in the life sciences sector which fosters long-term growth fundamentals,” said Nathalie Palladitcheff, President and Chief Executive Officer at Ivanhoé Cambridge. “Investing alongside Lendlease, who has a breadth of experience in constructing life science and research facilities, will allow both partners to grow their exposure in this sector.”          

60 Guest Street will contribute to Boston Landing’s diverse mix of uses and will strengthen Allston/Brighton’s emerging life science cluster. As one of the last sites to be developed as part of the master plan, the project will help complete the vision for Boston Landing as a transformative urban mixed-use environment in the Allston/Brighton neighborhood. Lendlease has seen firsthand the benefits of creating lively, people-centric, public destinations in Boston with Clippership Wharf, its climate-resilient mixed-use residential project on the East Boston waterfront.

“The city of Boston has always been a notable life science hub, with COVID-19 only highlighting the importance of the sector as the region’s newest growth engine,” said General Manager of Development for Lendlease Boston Nick Iselin. “This project is an important milestone for elevating Lendlease’s life science development capabilities in Boston and expanding on our existing life science construction experience in major markets across the U.S. We look forward to contributing an iconic project to the Allston /Brighton neighborhood with the delivery of 60 Guest and to enhancing an already dynamic mixed-use site from NB Development Group.”

“60 Guest Street will be a spectacular mixed-use, transit-oriented development strategically located within the Allston/Brighton neighborhood, with close proximity to Cambridge’s Kendall Square, the epicentre of the life science market in Greater Boston and across North America,” said Jonathan Pearce, Executive Vice President, Leasing and Development at Ivanhoé Cambridge. “This new life science building will offer exceptional and ultramodern amenities to cater to robust demand for specialized life science and research facilities in the Greater Boston area.”

60 Guest Street: a world class life science building

The proposed nine-story structure will comprise 320,000-square-feet of state-of-the-art office/lab space and a robust amenity program featuring a multi-purpose ground-floor and outdoor spaces at key locations throughout the building. Boston Landing is home to New Balance’s global headquarters, the Boston Celtics’ Auerbach Center and Bruins’ Warrior Ice Arena, as well as an indoor track and entertainment venue, lab/office and residential uses, and a planned 175-room hotel. The site attracted Lendlease with its easy transit access, a focus on health and wellbeing, and its burgeoning retail environment.

Lendlease’s experience in the life science sector is not new. The company’s Construction Management business has been involved in more than 350 life science and research facilities in the northeastern U.S., amounting to approximately 17 million-square-feet. Lendlease will apply that experience to 60 Guest, alongside Ivanhoe Cambridge, and will grow their exposure to this sector through additional investments and developments in life science ecosystems located in its gateway U.S. markets.

The Lendlease and Ivanhoe Cambridge partnership acquired the site from NB Development Group and will utilize the site’s prominent location adjacent to the Massachusetts Turnpike to offer a unique design expression that complements the diverse architectural language that has already been established at Boston Landing. The partnership has retained SGA Architects, a leading Boston-based life science firm to design the project.

The project will have an estimated $0.5 billion end value upon completion and the construction of the project is targeted to commence in June 2022.

This is a fantastic development project with a great partner, one that will really enhance Ivanhoé Cambridge's portfolio once it is completed.

Boston has always been a notable life science hub where you will literally find some of the best emerging biotech companies in the world.

Biotech is exploding. I should know, have been tracking the portfolios of top biotech funds for many years and trade/ invest in the sector, it's just incredible what is going on out there to treat all diseases and most (not all)  small biotech disruptive companies are based in Cambridge, Massachusetts (other is San Francisco, San Diego and elsewhere). 

Boston has two of the best universities in the world (Harvard and MIT) and obviously Harvard Medical School and Mass General, the #1 research hospital in America.

The entire healthcare ecosystem of Boston is second to none, it's literally the best city to develop a world-class life science project. You have dedicated top-notch researchers working at universities and in the private sector, a great teaching/ research hospital, great public transportation and a great quality of life.

I'm not laying it on thick, there's a reason why the top students from around the world are fiercely competing to study in Boston, it is an incredible life science hub which attracts the top minds from all over the world to work in academia and the private sector, all researching to find new treatments for rare and common diseases.

All this to say that Ivanhoé Cambridge was right to partner up with Lendlease to build this project as it will be one of many to come in a strategic and growing sector of the economy.

By the way, Ivanhoé Cambridge isn't the only real estate outfit targeting life sciences assets.

Recall, OMERS' Oxford Properties also recently invested $985M in 4 US life sciences assets:

Oxford Properties Group has acquired four life sciences properties plus developable land in the Boston and San Francisco areas for $350 million (all figures Cdn). It also plans to develop an additional $635 million worth of medical laboratory space at the Bay Area property.

The acquisitions and development plans are part of Oxford’s strategy to become a larger player in the life sciences sector, which it sees benefiting from emerging trends in the convergence of technology and science.

Oxford has been building up both assets and a bank of development land in the sector since 2017. It has also been engaged in the life sciences sector through its credit business.

The San Francisco-area asset is the Public Market Emeryville, acquired in partnership with City Center Realty Partners, a San Francisco-based real estate developer and investor.

The 148,000-square-foot mixed-use property comprises lab space, retail, food and offices within the established life sciences cluster of Emeryville.

The investment includes 36,000 square feet of ground-floor, first-generation lab space, a food hall and approximately 60,000 square feet of office and retail space which Oxford intends to convert to lab space.

The deal also features land parcels Oxford plans to develop into purpose-built lab product in a market with almost zero availability for such space.

Life sciences a priority for Oxford Property Group

“Growing a meaningfully sized life sciences business represents one of our highest-conviction investment strategies and top priorities across our business,” said Chad Remis, executive vice-president, North America at Oxford Properties, in the announcement.

“These transactions grow our presence in two key global life sciences markets and complement our existing portfolio of assets and significant development pipeline in the sector.

“It gives us a solid foundation to continue to grow from as we seek to scale this part of Oxford’s business in 2021.”

City Centre had also been part of the previous ownership joint venture.

“City Center looks forward to our collaboration with Oxford on this project and continuing our successful transformation of Public Market Emeryville from a suburban-style collection of buildings and surface parking lots into a premium mixed-use life science campus in the East Bay,” said Mark Stefan, City Centre’s president and co-founder, in the release.

Three Boston-area properties

Oxford also acquired three assets in the Boston area:

– 33 New York Ave. is a core, recently completed 114,000-square-foot state-of-the-art bio-manufacturing facility 100 per cent leased to Replimune Group Inc. and CRISPR Therapeutics.

– 1 and 5 Mountain Rd. are two adjacent buildings that comprise 153,000 square feet and are currently leased to Sanofi. Oxford has identified significant value-add opportunities for 1 and 5 Mountain Rd.

Oxford’s push into life sciences in North America will initially focus on Boston, the San Francisco Bay Area, San Diego, and other emerging locations, the company said. Beyond North America, Oxford is also reviewing opportunities across Europe as it seeks increased global exposure to the asset class.

“Growth in this asset class is being driven by a number of tailwinds. Aging populations are a demographic engine; however, the need for new treatments, diagnostics and equipment goes beyond that trend alone,” Remis explained in the announcement.

“Technology and science are converging with advances in data analytics and AI that is accelerating life-changing innovations across biotech, pharmaceuticals, nutrition and medical devices.

“As a result of this shift, private equity and venture capital funding for promising products and companies has markedly increased in recent years. This surge of activity and the formation of new and growing companies is taking place against the backdrop of a limited supply of lab infrastructure in the sector’s key global markets.”

About Oxford, City Centre Realty Partners

Established in 1960, Oxford Properties Group manages approximately $60 billion of assets across the globe on behalf of its co-owners and investment partners.

Oxford’s portfolio encompasses office, retail, industrial, hotels and multifamily residential and spans more than 100 million square feet across four continents. It invests in properties, portfolios, development sites, debt, securities and platform opportunities across the risk-reward spectrum.

While its global headquarters is in Toronto, Oxford operates out of over 15 regional offices including New York, London, Luxembourg, Singapore and Sydney. Oxford is owned by OMERS, the defined benefit pension plan for Ontario’s municipal employees.

City Center Realty Partners, LLC (CCRP) is a San Francisco-based real estate investment firm specializing in the development, redevelopment and acquisition of urban real estate. Across the United States, CCRP has developed and acquired more than $1 billion of retail, office and mixed-use properties.

Of course, Boston isn't just a life science hub, it's a premiere tech hub which is why PSP invested in a lease deal with Amazon there.

Lastly, a quick note on the performance of Ivanhoé Cambridge and Oxford Properties last year as both real estate subsidiaries took some massive writedowns on non-performing assets and experienced significant losses.

The pandemic hit the world and many assets got hit hard. We are moving quickly to vaccinate the population (make sure you get vaccinated), we will recover from this and both these real estate subsidiaries will come back very strong over the next five to ten years.

Their strategic orientation is changing, their portfolios are becoming more resilient, more diversified across sectors and geographies, they will bounce back strong.

I'm not just saying this, I firmly believe it and it's really important to focus on the long run when looking at the returns of pensions, especially the returns of private markets which do not immediately enjoy the liquidity tsunami the Fed and other central banks unleashed to prop up public market assets.

I'm getting a little tired and irritated with Monday morning quarterbacks who don't have a clue about pensions and real estate and private equity stating their critical opinions publicly. 

Again, the pandemic hit some pensions and their assets harder than others, please stop comparing them and stop jumping to conclusions. 

I have full confidence in Nathalie Palladitcheff, CEO of Ivanhoé Cambridge and Michael Turner, CEO of Oxford Properties, and their respective senior managers. These are world-class real estate outfits.

Last year was a very tough year, they know this well, but it's time we all turn the page and start looking ahead. 

No matter what happens in a post-pandemic world, real estate will remain a critically important asset class at all of Canada's large pensions.

We need to trust the professionals managing these assets, they know what they're doing and they've weathered a few storms in their careers.

Alright, let me wrap it up there.

Below, one of Brighton's many changes; in place of old stock yards: Boston Landing, a 15-acre site marked by New Balance's eye-catching headquarters (2018). 

Nice clip, shows you how this location has been transformed and how it's growing fast and why this new project Ivanhoé Cambridge and Lendlease are developing will be a long-term success.