MIT announced this week that it intends to sell some share in the seven buildings of Technology Square while retaining ownership of the land itself. This transaction will not affect current tenants, including about half a dozen MIT offices and departments in the development, which is located a few blocks from Kendall Square in Cambridge.
"MIT is looking to recapitalize the property at this time to take advantage of favorable market conditions," said Steve Marsh, managing director of MIT's real estate investments office.
"We are fully committed to keeping the space leased by MIT offices and departments in Technology Square fully integrated into our campus and to making a smooth transition to the new building owners," said MIT Provost L. Rafael Reif.
"MIT's decision to sell its interest in the buildings is a prudent investment decision that will enhance our overall financial strength. Decisions to recapitalize in this way occur frequently in the real estate investment world and usually result in a seamless transition with no impacts on the tenants," he said. "MIT intends to retain ownership of the land at Technology Square and therefore would be the landlord to anyone who owns an interest in the buildings."
MIT purchased Technology Square from Beacon Capital Partners for $278.8 million in January 2001. At that time, there were four buildings on the property and three more under construction. MIT converted the parcel from an office park to a life sciences and technology center with laboratory, office and retail space and a parking garage. The parcel is bounded by Main, Portland and Broadway streets, with Draper Laboratory on the fourth side.
In addition to large biotechnology firms, including Novartis, the 1.15-million-square-foot development is home to MIT's Institute for Soldier Nanotechnologies, Center for Biomedical Engineering, Facilities, Central Accounting Office and the MIT Federal Credit Union. Before moving into the Stata Center in 2004, the Laboratory for Computer Science and the Artificial Intelligence Laboratory were tenants of 200 Technology Square for many years when MIT did not own the property.
At the city's request, MIT marketed first-floor space to small retailers as a way of bringing foot traffic to the area. Quizno's Subs, 7-Eleven Convenience Store, Kinko's, Fitcorp and Bank of America all lease space in the development, and the university is working to identify new retail establishments to take space recently vacated by Polcari's restaurant.
High-tech and life sciences firms, including Novartis, Dyax, TolerRx, Forrester and Elsevier publishing company, lease office and lab space at Technology Square.
The increase in property values since 2001 has meant increased real estate tax revenue for Cambridge. MIT paid the city $2.8 million in taxes on the parcel in 2001, and will pay nearly $6.2 million in 2006. Because MIT will continue to own the land at Technology Square even after the recapitalization, the Institute will continue to pay the city real estate taxes for the entire parcel.
A version of this article appeared in MIT Tech Talk on January 25, 2006 (download PDF).