Vertex move to Fan Pier hits snag
Boston Business Journal - by Michelle Hillman
Fan Pier’s Joseph Fallon is the latest Boston developer to struggle to land enough financing to lure a major Cambridge biotech tenant.
Vertex Pharmaceuticals Inc. (Nasdaq: VRTX) is close to renewing leases in Cambridge for more than 300,000 square feet, delaying plans to move its headquarters to Fan Pier, according to industry sources.The drug company has not entirely abandoned the idea of moving to the South Boston waterfront, but the deal hinges on the capital markets loosening up and Vertex gaining for approval for a key drug, the sources said.
Vertex continues to negotiate an agreement to move to Fan Pier should Fallon arrange crucial financing needed to move the project forward, according to multiple real estate sources with knowledge of the negotiations.
Vertex will need as much as 1 million square feet of office and lab space in about five years, said one source who asked to remain anonymous because the negotiations are confidential.
The Boston Business Journal first reported in July that Vertex Pharmaceuticals signed a letter of intent to lease an initial 500,000 square feet of office space and was pursuing a deal to lease as much as 1 million square feet in two buildings.
Vertex’s spokesman, Zach Barber, declined to comment on Friday because “it’s a private process,” he said. However, a real estate source said the pharmaceutical company was forced to renew its Cambridge leases when it became apparent that Fallon would not be able to secure the necessary financing.
Vertex has 300,000 square feet of leases expiring in 2011 in Cambridge buildings known as Fort Washington Research Center 1 and 2. Though Vertex wanted the Fan Pier deal to happen, the collapse of the stock market and subsequent lack of financing had made it very hard for developers to construct new buildings.
Without available financing, construction projects across the city, and country, have stopped dead in their tracks.In another project, the Boston Business Journal reported Thursday that developer John Hynes is taking a “time out” on the Filene’s project because he cannot secure the $400 million construction loan needed to build the $700 million mixed-use project in the heart of Downtown Crossing. Hynes already has demolished the Filene’s building.
Fallon broke ground on the 21-acre waterfront site last summer and has yet to secure a tenant for the development. Fallon is currently building a 500,000 square-foot office building on a speculative basis or without a tenant. The second, 500,000-square-foot building, intended for Vertex is not underway.
Vertex currently occupies 500,000 square feet of space in half a dozen buildings in Cambridge. Vertex was founded in 1989 in a 10,000-square-foot building in Cambridge which the company still occupies. Vertex currently employs more than 1,150 people worldwide, with 894 in Cambridge.
Michelle Hillman can be reached at mhillman@bizjournals.com.
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