Boston Children’s Hospital is in advanced discussions to occupy about half of a Fenway lab building under construction less than a mile down Brookline Avenue from its Longwood Medical Area campus, the Globe has learned.
No deal has been signed, but Children’s is considering expanding into 421 Park Drive, a forthcoming 13-story lab located between the former Sears warehouse at 401 Park Drive and the Fenway MBTA Green Line station, as a research and development space, according to four industry sources.
Alexandria Real Estate Equities is developing 421 Park, and recently completed another lab building nearby at 201 Brookline Ave. — a 14-story property the developer recently reported has “100% occupancy.” Construction on 421 Park, which will include a new Star Market on its ground floor, is expected to be done in early 2025.
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Both Children’s and Alexandria, a major life science developer with a long track record in Kendall Square that has recently branched out to other emerging lab districts, declined to comment. On its website, the pediatric hospital notes its existing research space footprint of 1 million square feet “is growing,” and that it employs more than 3,000 researchers and scientific staff.
It’s not clear if Children’s would lease the space or buy its half in a condominium arrangement. Industry sources familiar with the deal said Children’s is looking to occupy roughly 270,000 square feet at 421 Park, an overall 550,000-square-foot building.
Last year Children’s opened an 11-story clinical building on its Longwood campus, called the Hale Family Building.
The potential expansion comes as lab demand in Boston has receded to more normal levels after spiking in the years following the worst of the COVID-19 pandemic — a tempering that has left some projects in limbo. For example, Alexandria is stopping plans to convert a three-building office campus on the Green Line in Newton to lab space.
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Overall, in Greater Boston, “demand for R&D space remains well below pre-pandemic levels,” according to a recent report from CBRE. Meanwhile available sublease space reached a 20-year high of more than 1.6 million square feet in the first three months of the year — a definite shift for an industry where availability of premium lab space has typically been near zero.
“While the construction pipeline has remained robust, the demand side of the market has seen a sharp slowdown from the 2022 peak as both private and public companies battle a difficult economic environment and record-high construction pricing,” wrote Suzanne Duca, CBRE’s director of research for New England, in the report.
Given those economic headwinds, a deal for half of 421 Park with one of Boston’s premier institutions is significant, said one veteran life-science broker who spoke on condition of anonymity.
“It’s huge anytime, especially in this environment ... especially this amount of square footage from this marquee tenant,” the broker said.
Life-science developers such as Alexandria are still launching projects in Boston and Cambridge, along with surrounding cities including Somerville and Watertown. Just in Boston, developers have broken ground on more than 1.2 million square feet of labs since the start of the year, including IQHQ at 109 Brookline Ave. in Fenway, King Street Properties at 305 Western Ave. on the Allston/Brighton border, and Related Beal at 420 Rutherford Ave. in Charlestown.
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Some 16.4 million square feet of R&D lab space is under construction in Greater Boston and is slated to be ready for tenants by the end of 2026, according to CBRE data.
Catherine Carlock can be reached at catherine.carlock@globe.com. Follow her @bycathcarlock.