Biotech Players Lead a Boom in Cambridge

Instead, the land lay fallow for decades, even as spinoff companies from the adjacent Massachusetts Institute of Technology transformed the neighborhood into a major research hub.

But now, this corner of Cambridge is at the center of a real estate boom.

“You sit here and you’d never know there’s a recession going on anywhere else in the country,” Travis McCready, executive director of the Kendall Square Association, said over chai tea recently at Voltage Coffee & Art.

Cranes are busy on eight separate construction sites in this area, and roughly two million square feet of space is being built or renovated or is under city review here. An additional 1.4 million new square feet is committed, and more is expected elsewhere in this city of 106,000, located directly across the Charles River from the city of Boston. If it all gets built, the new investment in Cambridge will come close to $2 billion.

“It’s one of the hottest submarkets in the country,” said Steven Purpura, managing partner of Richards Barry Joyce & Partners, a commercial real estate firm based in Boston. “Top two or three for sure.”

Most of that growth is connected to the biotechnology and pharmaceutical industries, including new buildings for Pfizer and Novartis. Amazon just revealed plans to rent 100,000 square feet here; Google is expanding its footprint by 40,000 square feet; and Microsoft, I.B.M. and Nokia are nearby.

Pharmaceutical companies traditionally preferred suburban enclaves where they could protect their intellectual property in more secluded settings and meet their employees’ needs.

But in recent years, as the costs of drug development have soared and R.& D. pipelines slowed, pharmaceutical companies have looked elsewhere for innovation. Much of that novelty is now coming from biotechnology firms and major research universities like M.I.T. and Harvard, just two subway stops away.

“People are putting their pride away and working with who they need to work with,” said George A. Scangos, chief executive of Biogen Idec.

Mr. Scangos’s company illustrates the trend. When he took the helm at Biogen in 2010, his predecessor had just relocated the company’s headquarters to the suburban town of Weston, leaving its scientists behind in Cambridge, a half-hour’s drive away.

Mr. Scangos thought the separation was bad for the company, but rather than move the scientists, he decided to bring the company back to town. Biogen is now the anchor tenant of a $500 million, 1.7-million-square-foot development being built by Alexandria Real Estate Equities, on the former urban renewal site. The rest of its 3,500 local employees will occupy a second building nearby also expected to be completed by late 2013 by Boston Properties.

“It’s an amazing place to be,” Mr. Scangos said. “The intellectual firepower that is in Cambridge, between Harvard and M.I.T. and the number of companies, is quite remarkable.”

Pfizer also chose Cambridge when it was looking to consolidate some of its research operations. In 2011, the pharmaceutical giant announced it would move 400 research jobs to a new building on M.I.T.-owned land in Cambridge, even as it was closing facilities in Groton, Conn., and elsewhere. That $300 million, 180,000-square-foot building is expected to be completed later this year.

Novartis, one of the first giant pharmaceutical companies to set up major operations in Cambridge, is adding two buildings to its campus on Massachusetts Avenue. They will occupy a combined 550,000 square feet at a cost of $600 million when they open in 2015.