Alexandria Sells Watertown Mall, Ends Lab Space Conversion

The Watertown Mall’s run as a life sciences property ended before it could ever begin.

Alexandria Real Estate Equities sold the Boston-area retail property to National Development for $100 million, the Boston Business Journal reported. The deal for the 261,000-square-foot mall breaks down to $383 per square foot.

The arrival of the Newton developer brings about a significant shift for the property’s slated future. When Alexandria purchased the asset in 2021 for $130 million, the company proposed converting much of the mall to life sciences and office space, 500,000 square feet in all.

With Alexandria out of the picture, National Development plans to keep the Watertown Mall’s status as a retail hub, which counts Best Buy and Target among its tenants. Neither the buyer nor seller immediately returned requests for comment from the publication.

There’s no indication of why Alexandria decided to bail on its plans and sell the property after only four years, but the company’s bread-and-butter is life sciences and lab development, a type of space Boston seemingly couldn’t get enough of a few years ago, but is today in overabundance.

At the beginning of 2022, there was almost no vacant lab space in Boston’s market. Compare that to the third quarter of this year, when the vacancy rate stood at 27.7 percent, according to CBRE. The average lease rate dropped from approximately $100 per square foot to $85 per square foot over the same period.

At the end of last year, there was close to 12 million square feet of empty lab space in the market, according to Colliers. There are at least 20 lab buildings in the market that are entirely vacant, including many built in recent years, when it seemed the life science boom would never end.

Alexandria and National Development have experienced both sides of the coin together. Over the summer, Foghorn Therapeutics relocated from an Alexandria building in Cambridge to one in Watertown, which Alexandria co-owns with none other than National Development.

— Holden Walter-Warner