The Enduring Appeal of Kendall Square

If Fenway Park is a place that every able-bodied Boston kid wants to someday hit a home run out of, then Kendall Square is the big leagues for high technology firms seeking entrepreneurial success. And while the commercial real estate market for startups, meds and eds, and venture-backed firms has been anything but predictable as of late, Kendall Square continues to attract major star power.

However, in the post-pandemic market where restraint has become the primary currency, has the demand to be in Kendall Square shifted to such a degree that tenants are looking elsewhere? In 2018, vacancy rates hovered at 1 percent; today, it’s closer to 26%.

The answer, like many complex questions, is nuanced, and far from black-and-white. However, it’s clear that the bedrock upon which Kendall Square is built will keep it a desirable destination for decades to come.

Proximity or Price: Different Firms, Different Drivers

A few years ago, the thought of Kendall Square potentially cooling off seemed unfathomable. Tenants were grabbing as much space as they could, sometimes even snatching up adjacent offices on a “just in case” basis. The reasons for being there were numerous, ranging from startup CEOs and seasoned business executives who wanted to remain near their alma maters and alumni networks of Harvard and MIT, to portfolio companies locating near board members and other advisors.

Incubators have long considered Kendall Square home, except now the companies based within them are staying in place for longer terms, choosing to remain close to the entrepreneurial network they’ve come to love. These are some of the assets Kendall Square brings to bear, and recent moves like Biogen leaving nearby Cambridge to base its global headquarters and innovation hub there is just one example of many showcasing the enduring curb appeal of this research-heavy hub.

However, the last few years have helped many firms reassess their needs and determine whether a Kendall Square address is truly relevant to its business goals. Not every CEO went to Harvard, and not every company needs to meet its board members face-to-face. The suburbs of Waltham and Watertown have proven to be fertile ground for companies looking to combine access to talent with nearby lunch spots, along with lower cost per square foot. And in nearby East Cambridge, emerging companies are finding attractive office and research spaces on Erie Street, Sidney Street, and Memorial Drive, trading some convenience for landlords with flexible lease terms and competitive rates. Put simply, choices abound - and that includes finding suitable space in Kendall Square if that suits your firm.

For more information on the latest market trends and forecast data for the Greater Boston area and nearby communities, be sure to check out Cresa’s Q3 market insight reports here.