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640 Memorial Drive Cambridge Massachusetts VOLUME 26 NUMBER 4 JANUARY-MARCH 1996 OFFICE 640 MEMORIAL DRIVE CAMBRIDGE, MASSACHUSETTS PROJECT TYPE The adaptive use of a historic industrial building into a 236,250-square foot multitenant biotechnology, laboratory, and office facility. Redeveloped by the Massachusetts Institute of Technology (MIT), the building's locational attributes, 40,000-square-foot floor plates, and ornate facade created a unique opportunity for commercial reuse. To capture the growing biotech market, MIT financed tenant improvements, which are amortized over the life of each commercial lease. SPECIAL FEATURES Adaptive use Biotechnology laboratory and office facility University sponsored development Venture-leasing DEVELOPER Massachusetts Institute of Technology Real Estate Office 238 Main Street, Suite 200 Cambridge, Massachusetts 02143 617-253-1483 ARCHITECT Tsoi/Kobus & Associates P.O. Box 9114 One Brattle Square Cambridge, Massachusetts 02238 617-491-3067 GENERAL DESCRIPTION Originally designed and developed as the Ford Motor Company's first multistory automobile assembly plant, 640 Memorial Drive in Cambridge, Massachusetts, is now home to light industrial, manufacturing, and office tenants. Redeveloped by the Massachusetts Institute of Technology (MIT), the 236,250-square-foot, five-story building was transformed into a speculative multitenant biotechnology, office, and laboratory facility. MIT considered rehabilitating the building for academic-related uses (such as housing, administration, or classroom facilities). However, given the property's intrinsic commercial real estate potential, MIT chose to redevelop the historic structure into a commercial asset designed to capture and accommodate the region's expanding high-tech and biotechnology industries. The redevelopment of 640 Memorial Drive was spearheaded by the MIT Real Estate Office, a semi-independent division of the university created in 1977 to maximize the institution's return on real estate assets not used for academic purposes. Acting as the owner, developer, and sole financier of the project, MIT plans to use the property's income to assist in the funding of academic-related development initiatives. SITE HISTORY Originally constructed in 1913, the building was one of a variety of similar facilities conceived around the prevailing vertical manufacturing—assembly line—technology. Ford's auto manufacturing was transferred elsewhere in 1926, when horizontal manufacturing procedures rendered the older vertical systems obsolete. MIT acquired the property in 1956 and until 1984 leased the facility to Polaroid, which used it to manufacture components for instant cameras. From 1984 to 1987, part of the building was leased to a video display projection company. When the building became vacant in 1987, MIT began to examine the structure's redevelopment alternatives. THE DEVELOPMENT PROCESS In 1988, MIT solicited competitive bids from developers for the redevelopment of 640 Memorial Drive. The only physical requirement attached to the request for proposal (RFP) was that a significant portion of the original building's architecture be retained. More than 40 expressions of interest were received. By 1989, however, the Boston real estate market had suffered a severe downturn. The unavailability of financing for speculative development made it impossible for MIT to redevelop the property through a venture with an outside interest. Convinced that the old assembly plant could generate commercial income, MIT's Real Estate Office recommended that the facility be redeveloped by the university into a commercial asset. But not until 1990 did the MIT Board give the go-ahead for the university's real estate office to begin investing hard dollars in the project's development. The decision to redevelop the historic structure into a speculative biotechnology facility was based on several parameters, including the building's physical attributes, proximity to technology and medical-related activity, and MIT's unique knowledge of the real estate and biotechnology marketplace. FINANCING At the time of 640's development there were limited financial resources available to emerging biotechnology companies other than funding available through venture capital firms. MIT recognized that such financing deficiencies had created pent-up demand for office and laboratory space near research centers. The university was able to pro-actively respond to this market demand by financing 640's tenant improvements (which in some instances included substantial lab and manufacturing facilities costing up to $70 per square foot). MIT financed the buildout for all six of the building's tenants and is amortizing the improvements over the life of the leases. The university also offered "venture leasing" for a targeted biotech tenant with high growth potential (who now occupies 48,000 square feet of space). Under this arrangement, as an additional risk premium (over and above the buildout financing), MIT acquired stock warrants in the company (much like a venture capital fund) which can be exercised in the future should MIT desire to do so. DESIGN Originally designed by John Graham, the 236,250-square-foot, five-story building features a brick and terra-cotta facade. The building's east, south, and west exteriors exhibit decorative features such as a terra cotta cornice line, arched windows with terra-cotta lintels, and a clock tower. A five-story glass and steel train shed running the entire length of the structure originally dominated the rear of the building. The structure's elaborate exterior made the former industrial building particularly amenable to office use. Conversion of the building began in August 1992 and was completed in March 1994. MIT decided early in the project to be as faithful as was economically possible to retaining and restoring the building's highly decorative facade and other historic characteristics. While qualified to be listed on the National Historic Register, an agreement between MIT and the Cambridge Historic Commission kept the building from being officially listed. MIT pledged to cooperate with the commission on an informal basis to address the commission's concerns and desires. Most of the building's terra-cotta cornice was sound, but the glazing had deteriorated. To keep down costs, fiberglass molding, fabricated to look like the original terra-cotta molding, was used to cover the cornice. In other areas, precast concrete was used to replace numerous odd-shaped terra-cotta pieces. Deteriorated window structures, originally composed of a grid of small panes, were replaced with new, wider panes more appropriate to the building's current use. The multistory glass and steel train shed was transformed into the building's lobby and common area entrance. While a majority of the train shed was demolished, the design team preserved the structure's central portion, transforming five historic window bays into an atrium. The lobby's new mullions and structural steel were painted white in order to distinguish the new construction from the original structure thereby mixing the dominant features of the past with an overall contemporary feel. The area behind the main building originally was taken up by open parking and storage sheds. The structures were demolished to increase the parking area. In addition, one of the original side buildings was replaced with a similar single-story structure that forms a streetfront extension to the primary building. This facility houses a cafeteria and multipurpose rooms. Accommodating parking required creative design and engineering. The site was too small to provide adequate surface parking. Adding structured parking was too expensive. The solution was to use 80 parking spaces at an off-site lot (three blocks away) owned by MIT. An on-call taxi service shuttles users between the building and the off-site parking lot. Each tenant is assigned a pro rata number of parking passes coded for either lot, requiring the tenant to determine how to allocate the spaces to its employees. Parking spaces are generally charged to the tenant at $60 per month for on-site spaces and $40 per month for off-site spaces. CONSTRUCTION The building's interior was in excellent condition structurally. The interior support columns required no repair or replacement. The columns' 23-foot spacings made the building suitable for office use. However, because the previous use had not required level floors, it was necessary to top the floors with poured concrete to make them even and suitable for office use. The building's outdated mechanical systems were replaced with two new gas-fired boilers and eight new rooftop HVAC units. In order to market the building as an office and biotech facility, mechanical systems were installed that gave tenants the flexibility to improve the systems as needed. Space on the roof was also provided for tenants to add their own air-handling equipment. Given the age and previous industrial uses of the building, the need for environmental mitigation was minimal. A limited amount of asbestos and some lead paint were found and removed. Two 20,000 gallon oil tanks located in a storage bunker also were removed. MARKETING/TENANTS Because the preexisting manufacturing facility had fallen into serious disrepair, the development team was forced to rely heavily on architectural renderings and models to attract redevelopment tenant commitments. Lifeline Systems was the first tenant to sign, committing to 105,000 square feet. But by late 1991, Lifeline had downsized, leading to a restructured
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