Eli Lilly Inks Lease for $700M Life Science Project

15 Necco St., Seaport Innovation District. Image courtesy of Alexandria Real Estate Equities Inc.

Alexandria Real Estate Equities Inc. has signed Eli Lilly and Co. to a 334,000-square-foot, full-building lease of 15 Necco St., the REIT’s life science project in Boston’s Seaport Innovation District. The renowned health-care company will invest approximately $700 million for Alexandria’s development of the building that will house its Lilly Institute for Genetic Medicine.

The news will come as no surprise to anyone who was listening to Alexandria’s fourth quarter 2021 earnings call. “Our current projects under construction are largely pre-committed,” Peter Moglia, co-CEO of Alexandria Real Estate Equities Inc., said during the call on February 1, 2022. “These projects include…a development in the Seaport submarket of Boston at 15 Necco, which is fully committed.”

Eli Lilly inked a long-term lease for 15 Necco, which Alexandria will operate after it completes the development of the project in partnership with National Development. The companies commenced construction of the property in 2021. Sited on a nearly 3-acre site along Fort Point Channel, 15 Necco had been destined to become a headquarters campus for General Electric before Alexandria acquired the site, which included a small office building at 5 Necco St., in 2019 in a $252 million transaction.

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Alexandria’s plan for 15 Necco will alter the Boston skyline with a unique design by Elkus Manfredi Architects. The 12-story tower will encompass laboratory space and various office spaces with a focus on flexible work areas. Most notably, the building will offer a plethora of amenities, including indoor and outdoor spaces capitalizing on the waterfront location, a rooftop deck, green terraces, as well as ground-level public space that will incorporate retail offerings, walking paths and a public work lounge. Additionally, the facility will feature shared lab and office space to support biotech start-ups.

15 Necco will also be a model of efficiency. With a high-performance building envelope, efficient mechanical systems, on-site renewable geothermal energy and a solar panel installation, the property will be positioned to achieve high levels of energy efficiency. Alexandria and National plan to pursue LEED Gold, Fitwel and WELL certifications for 15 Necco.

Alexandria has actually leased a total of 370,000 square feet to Eli Lilly, a longtime tenant of the company, for the Institute project. To support the ramp-up of the Institute, Eli Lilly also committed to an additional 36,000 square feet at the REIT’s Alexandria Center at Kendall Square in neighboring Cambridge, Mass.

A burgeoning hub-within-a-hub

Metro Boston remains the leading life science market in the country, and the city is full of its own mini-clusters. In a prepared statement, Moglia said Alexandria is pioneering a new life science submarket in the Seaport area. At the close of 2021 in Seaport, the company was operating three properties totaling approximately 283,000 square feet, with an average occupancy of 96 percent. Alexandria appears to have its finger on the pulse.

“The Seaport’s life science cluster continues to gain importance. In fact, this submarket is home to some of the metro’s largest ground-up and conversion projects, and it is positioned to overtake Fenway/Kenmore as the largest life science submarket in the city within the next few quarters,” according to a fourth-quarter 2021 report by Colliers International.

Alexandria and National plan to complete construction of 15 Necco in late 2023, and Eli Lilly will open its Institute in the new building in 2024.