Life Sciences Downturn Forces IQHQ to Shelve $1 Billion Fenway Center Project
A billion-dollar life sciences development straddling the Massachusetts Turnpike has been put on indefinite hold as challenging market conditions continue to weigh on the sector.
IQHQ, the San Diego-based developer behind the 960,000-square-foot Fenway Center project, will not proceed with vertical construction until the development secures leases for at least half its space, the company told The Boston Globe. The decision comes despite years of infrastructure work and tens of millions invested in building a platform above the busy interstate highway.
Tracy Murphy, IQHQ’s president, spoke to the difficult environment in comments to The Globe:
“We have no plans to go vertical at this point,” she said. “Given lending market conditions, we’re going to sit and evaluate once the podium is done in the first quarter.”
The company plans to complete the highway deck — a complex engineering feat that required five years of construction, multiple lane closures and a $55 million air rights agreement — by early 2026 and then reassess market conditions before committing to the towers above.
The Fenway Center pause comes during a difficult stretch for the life sciences sector in greater Boston, where too much new space and not enough tenant demand have made it hard for developers to move forward with new projects. According to Cushman & Wakefield data from the third quarter, more than one-third of all life sciences space in greater Boston sat vacant. Hardest hit was the urban ring — comprising Watertown, Somerville, Allston, Brighton and Fenway — with 55% of its 11.7 million square feet of lab space sitting empty.
What’s more, IQHQ is feeling the pressure across its greater Boston portfolio: The developer’s 285,000-square-foot building at 109 Brookline Ave. is currently seeking tenants. Additionally, plans for 646,000 square feet of lab space on North Beacon Street in Brighton were set aside, and the company is also reconsidering its approach to the Hotel Buckminster redevelopment in Kenmore Square. IQHQ is developing Fenway Center in partnership with local firm Meredith Management Corp.
Boston Office & Life Sciences Market Overview
While life sciences space faces its own particular challenges, the broader Boston office market is worth a look. According to Yardi Research data from October, Boston leads the nation in office construction with projects in development totaling nearly 4.7 million square feet last month. Manhattan, N.Y., (roughly 3 million square feet) and Dallas (more than 2 million) followed. Together, Boston and Manhattan accounted for nearly 23% of the national pipeline of approximately 33.4 million square feet.
Notably, the office vacancy rate in Boston stood at 15.6%, down 120 basis points year-over-year. That places Boston among the tighter office markets nationally — well below the 18.6% national average and far from the highest vacancy rates seen in Seattle (27.4%); Austin, Texas (26.9%); and San Francisco (26.1%).
Meanwhile, average asking rents in Boston came in at nearly $49 per square foot, which is above the national average of $32.81 and the third-highest in the country behind Manhattan, N.Y., ($68) and San Francisco ($65). Miami ($56) and the Bay Area ($52) rounded out the top five.