The document provides a history of innovation in the Boston area from the late 19th century to present day. It discusses how innovation was originally viewed negatively but became associated with progress over time. It outlines key innovations and companies that emerged from the Boston area, especially along Route 128, and how this led to the region becoming a major center for technology and innovation. It also describes how more recent trends have seen innovative companies and entrepreneurs increasingly locate in urban areas within Boston rather than just the suburbs.

1. AUTUMN 2016

2. Yet only in its modern definition has the word
innovation become synonymous with progress.
Historically, the term carried a strong
negative connotation – oddity without purpose.
For centuries, those who dared innovate could
be charged as traitors or heretics.
In fact, by most accounts it wasn’t until 1939
when Austrian economist Joseph Schumpeter
used the term within the context of bringing
a product to market that it received a more
positive response. (Even then, its use was
essentially limited to economic and academic
circles.) Three years later, in Capitalism,
Socialism and Democracy, Schumpeter would
also go on to coin the term ‘creative destruction’
– the idea that “industrial mutation . . .
revolutionizes the economic structure from
within.”2
Stated succinctly - competition leads
to innovation.
In his 1997 book, The Innovator’s Dilemma,
Harvard business professor Clayton Christensen
argued that companies doing the right thing are
doing the wrong thing. Doing the right thing,
as Christensen saw it, had brought decades of
success. But it also meant missing opportunities
to innovate.
The poster child for this ‘evolve or become
extinct’ school of thought is Ken Olsen’s
Digital Equipment Corporation (Digital). Spun off
from MIT’s Lincoln Labs in 1957, and founded at
Clock Tower Place in Maynard (where it
occupied 8,600 SF at $0.25 PSF), 3 Digital would
go on to become the largest employer in
Massachusetts by the 1980s. Its minicomputers
were so revolutionary that venture capital firm
American Research and Development’s $70,000,
70% stake in the company was worth $400M by
1972.4
But when the personal computer came
along in the late 1980s, Digital’s product had
become dated. In 1998, its last remaining units
were purchased by Compaq.
: the act or process of introducing new ideas, devices, or methods.
Companies within this category fulfill one or more of the following:
a: High percentage of engineers, technicians or R&D employees
b: Creation of high-tech products (as specified on the US Census list
of Advanced Technology Product Codes)
c: Use of high-tech production methods 1
*For purposes of this discussion we respectfully defer to BLS
economist Daniel Hecker’s definition of high-tech and innovation
companies with one exception-we have excluded the life sciences
sector.
In-no-va-tion noun i-nə-vā-shən* LANDMARKS IN GREATER BOSTON'S
INNOVATION HISTORY: A TIMELINE
2004 Mark Zuckerberg and partners create Facebook in a
Harvard dorm room.
2016 General Electric decides to move HQ from Connecticut
to Boston’s Seaport District.
2010
Adam Neumann launches shared space model WeWork.
Now located in cities around the world, it occupies
140,000 SF at 745 Atlantic Avenue (Leather District),
50,000 SF at 51 Melcher Street (Seaport) and 113,000 at
31 St. James (Back Bay).
2016 Dell acquires Hopkinton based EMC - creating one of the
world’s largest technology companies.
1967-
1972
End of the Vietnam War and the space race slows down
military contracts to the area. A decline in defense
contracts and the significant loss of manufacturing jobs
forces companies along Route 128 to switch their focus
from military contracts to consumer markets.
1986
Fortune Magazine declares Ken Olsen, founder of Digital
Equipment Corporation, America’s most successful
entrepreneur.
1991 Raytheon’s Patriot Missile is used in the Persian Gulf War
for its anti-aircraft capabilities.
1998 1998 Digital Equipment Corporation is no more. The few
remaining business units are sold to Compaq.
2002 Originally known as CSN Stores, Wayfair is founded in
Boston’s South End.
1948
Gerald Blakeley Jr. of real estate firm Cabot, Cabot &
Forbes pioneers the concept of the planned industrial
park along Route 128.
1951 First section of Route 128 opens.
1951 Not wanting to conduct military research on campus,
MIT creates spin off Lincoln Labs.
1957
By 1957, more than 200 companies have
relocated to Route 128-including M/A-Com,
Millipore, and Sylvania. Nearly all of them have
moved from within 4 miles of Boston’s city center.5
1947-
1991
The Cold War brings more government funding to MIT
in the way of nuclear research.
1958 Department of Defense is founded.
1953
Researchers at MIT create “Whirlwind,” the world’s first
minicomputer. The team includes Ken Olsen who will go
on to found Digital Equipment Coorporation.
1895 1895 King Gillette partners with MIT chemist William
Emery Nickerson to develop the disposable razor.
1861 MIT is founded.
1877 Closely associated with Harvard, Edison’s Bell
Telephone opens.
1886 First MIT spin-off, Arthur D. Little opens doors.
1922
Raytheon is founded at 292 Main Street in Kendall
Square. Originally called American Appliance Company,
it will go on to perfect microwaves, radar and become
one of the country’s largest defense contractors.
1937 Edward Land’s Polaroid opens - a spin-off of Bell
Telephone.
1939-
1945
WWII sends over $100 million to MIT for technological
and applied research funding. The result will be the
perfection of radar and creation of anti-aircraft guns.
1946 Harvard spins off venture capital firm American
Research and Development Corporation.
When it comes to innovation, ‘market disruption’ is the name of the game.
Innovation, in its purest form, is the crusade to create something that makes
people stop using what came before. The automobile disrupted the horse
and carriage industry. iTunes turned the music industry upside down. And
the smartphone, with all of its apps, is disrupting everything from shopping
to journalism to real estate brokerage.
1962
Purchases by the federal government (predominantly
Department of Defense contracts) account for half of the
sales activity along Route 128.
Innovation Watch | Page 2 Innovation Watch | Page 3

3. “I FEAR THE DAY THAT
TECHNOLOGY WILL
SURPASS OUR HUMAN
INTERACTION.THE WORLD
WILL HAVE A GENERATION
OF IDIOTS.”
-ALBERT EINSTEIN
WHERE DO
ENTREPRENEURS
COME FROM?Long before there was Digital Equipment Corporation,
there were companies like Bell Telephone (1877) and
Raytheon (1922). Innovative users have been part of
greater Boston’s tapestry (and significant users of real
estate) for over 150 years. Our exposure to academia,
government funding, industry, and international
communities led to a ‘big bang’– creating Boston’s pool
of entrepreneurial talent.6
This combination is so
powerful that in 2015, Massachusetts had the highest
concentration of innovation economy employees.7
When we talk about the origin of innovation
companies, we generally start in Cambridge –
specifically with Harvard’s Ivy League cachet and MIT’s
technological talent. And our tendency is to focus on
Kendall Square. While current tenants include industry
giants Microsoft, Amazon and Google (and a slew of
key life science players), the ebb and flow of the
neighborhood’s tenant base has vacillated
between start-ups and grown-ups for decades.
Pick up any of our market reports over the past
5 years, and the story in Cambridge will be the
same – its astronomical rents and lack of
availability preclude most tenants except the
established and exceptionally well-funded from
securing even a small block of office space. In
fact, in the past 18 months, 60% of technology
leases were renewals. But innovation’s impact
on commercial real estate goes well beyond
Broadway and Main Street. Decades before
Kendall Square’s razor thin vacancy and
prohibitive rents pushed start-ups to the
Seaport and the suburbs, MIT spin-offs
began to cluster along Route 128.
With World War II came the advent of
government-funded defense research in
Massachusetts. The digital computer, defense
guidance systems and microwave technology all
came about as a result of the relationship
between academia (namely MIT) and government.
When the war ended, MIT researchers (who had
become accustomed to generous funding and
cutting edge technology) found it all but impossible to
return to the classroom. So many of them turned to
commerce – creating companies to bring these new
technologies to market. The problem was that
between 1935 and 1950, Boston and Cambridge had seen
little new construction. And the buildings that had
availabilities had become worn and dated.
Where were these new companies supposed to go?
When Route 128 opened in 1951, the timing was
perfect. Though its initial purpose was to divert
traffic around (rather than through) Boston, it served
a secondary function - providing access to acres of
undeveloped land just miles from Boston and
Cambridge. Seizing on the pervasive desire for new,
relatively inexpensive space with easy access to
downtown, Gerald W. Blakeley, Jr. of real estate firm
Cabot, Cabot and Forbes pioneered a concept that we
now take for granted: the planned industrial park. As a
result of his vision, 53 companies had moved to Route
128 by 1955. 24 months later, the number had increased
nearly five-fold to 223. And by 1967, 728 companies
called Route 128 home.8
But that was more than half a century ago. The
latest wave of entrepreneurs has shown a preference
for walkable urban environments. Five years ago, this led
to a surge of migratory
leasing activity in Boston’s
Seaport District. It also led to
an evolution of where start-ups
are born and where they grow
– with many ventures opting
for social, rather than solitary
spaces. This, in turn, has led to
the emergence of shared space
models.
Boston’s most prominent
example is WeWork (founded
in New York in 2010). Offering
a downtown address and
monthly memberships for
individuals and companies alike,
the firm has come to occupy
all but 1 ½ floors of the Leather
District’s 745 Atlantic Avenue,
over 100,000 SF at 31 St. James
in Back Bay and nearly 50,000
SF at 51 Melcher Street in the
Seaport.
And the preference for social space and urban
amenities is spreading to the suburbs too. Shunning the
congestion of the city and lured by free parking, more
established innovation companies are opting for
mixed-use build-to-suits. Between CityPoint and the
redevelopment of the Polaroid site at 1265 Main Street,
the Waltham of today is a far cry from the Waltham of
the 1950s.
For both young and established innovation companies,
proximity to talent is essential. Rising rents in Cambridge and
a generational preference for city conveniences means that
many companies are opting for Boston addresses to attract top
talent. The graphic below includes firms that have migrated into
Boston.
Boston
Migrated From the Suburbs
MigratedFro
m Cambridge
MigratedF
rom out of market
‘BURBS TO BEANTOWN...
Innovation Watch | Page 4 Innovation Watch | Page 5

4. 495
495
95
95
95
95
93
93
9090
90
95
225
40
40
125
129
129
62
62
3A
3A
4
4
2
62
225
225
225
110
117
110
111
62
85
85
85
9
135
135
135
138
28
37
3A
2A
2A
2A
2
2
38
107
129
129
1A
129A
1
107
114
1A
1A
62 35
97
60
99
128
135
27
109
27
27
126
126
126
117
9
9
30
30
30
85
126
16
140
2
38
27
28
20
20
3
3
1
1
1
3
Boston
Bev
Salem
PeabodyReading
Wakefield
LynnSaugus
Melrose
Lexington
Marlborough
Dedham Quincy
Brookline
Newton
Waltham
Cambridge
Somerville
Arlington
Medford
Revere
Chelsea
Lowell
Wilmington
Chelmsford
Framingham
Weymouth
Middleton
Ballardvale
Wenha
Danvers
Lynnfield
Stoneham
Woburn
Hanscom AFB
Lincoln
Sudbury
Wayland
Weston
Northborough
Westborough
Hopkinton
Upton
Braggville Mills
Norwood
RandolphCanton
Braintree
South
Weymouth
Westwood
Ashland
Sherborn
Natick
Dover
Wellesley
Milton
Hingha
Hull
Boston Logan
International Airport
Winthrop
Nahant
Billerica
Burlington
Bedford
Carlisle
Groton
DevensShirley
Ayer
Littleton
Acton
Berlin
Hudson
Stow
Maynard
West Concord
Harvard
Westford
North
Chelmsford
Pinehurst
Cochituate
Assabet River National
Wildlife Refuge
Dorchester
Mattapan
South Boston
Harold Parker
State Forest
Lynn Woods
Middlesexx
Fells
Reservation
VC Unicorns Locations that have received the most VC funding
With a 2.3% vacancy rate and asking rents starting in the high
$70s to low $80s PSF, Cambridge’s Kendall Square – the
nexus of the region’s innovation sector – has become off-limits to
all but the most well-established high credit technology tenants.
Amazon, Facebook, Microsoft and Google are all within 200
yards of each other, while IBM is less than a quarter mile
away on Binney Street.
Despite its tenant composition, the story in Kendall
Square is less than innovative. In fact, the narrative has
remained essentially unchanged for over half a decade – a
lack of availabilities and the ongoing surge in rents means few
deals are being executed. Despite (or perhaps because of) its
popularity, innovation companies accounted for only 6% of new
space leased in the past 18 months.
As the demand for lab space in the neighborhood (and
Cambridge in general) grows, the highest and best use for the few
remaining developable sites is laboratory – not office. This means
that Kendall Square (and Cambridge in its entirety)
is nearly saturated. Because tenants must now seek space
outside of Cambridge, Boston and the suburbs are morphing into
the next hotspots.
The Seaport may be Boston’s
original Innovation District, but in
recent years, its popularity means
it has become unaffordable to
all but high-credit tenants –
much like Kendall Square.
As a result, established
professional service firms
(State Street, PwC, Goodwin
Procter) have the largest
footprints in the neighborhood.
On a square footage basis, innovation
companies (exclusive of life sciences)
occupy about 20% of existing space.
Just five years ago, the neighborhood
offered brick and beam space, economical
rents and an assortment of options. But as
the neighborhood’s popularity has
exploded, so have asking rents. Space that
used to command rents in the mid $30s is
now priced in the low $50s. Despite rising
rents, the neighborhood is still a destination
– most recently (and notably) for General
Electric’s new headquarters. GE currently
SUBMARKET COMPARISON
resides in 43,000 SF on Farnsworth Street
– space previously occupied by
software developer Bullhorn (which
expanded and relocated to Summer
Street in the Financial District).
GE’s permanent headquarters will be on
Necco Street. Preliminary plans call for a
390,000 SF building with both office and
retail components. The 12-story building
will accomodate 800 employees.
CAMBRIDGE
A decade ago, few office tenants wanted to look twice – or even once – at the Inner Suburbs. Except for some great
restaurants and The Arsenal on the Charles, it was a gritty landscape of railroad tracks and worn-out warehouses.
Situated equidistant to suburbs and the city, the Inner Suburbs are becoming a relief valve for tenants priced out of
Cambridge.
Athenahealth’s 2013 purchase of the Arsenal on the Charles campus from Harvard University proved that hip, growing
software companies don’t always have to be at an urban address. Prior to closing the Watertown sale, athenahealth’s
Jonathan Bush had also considered Brighton’s New Balance complex. Comprising the towns of Watertown, Brighton,
Somerville and Medford, the inner suburbs offer economical rents, proximity to public transportation and serve as a link
between the suburbs and Boston.
INNER SUBURBS
Average Lease Size 35,000 SF
Average Effective Rent $70.80 Gross
Total Tech VC $779M
(last 18 months)
Largest New Deal IBM Corporation
Sublease
75-125 Binney St
163,000 SF
Vacancy Rate 2.3%
CAMBRIDGE AT A GLANCE
Average Lease Size 19,400 SF
Average Effective Rent $33.75 Gross
Total Tech VC $93M
(last 18 months)
Largest New Deal iHeartMedia
1 Cabot Rd
Medford
20,000 SF
Vacancy Rate 6.6%
INNER SUBURBS AT A GLANCE
Average Lease Size 12,300 SF
Average Effective Rent $45.00 Gross
Total Tech VC (last 18 months) $395M
Largest New Deal Autodesk
21-25
Drydock Avenue
89,100 SF
Vacancy Rate 7.2%
SEAPORT AT A GLANCE
UNICORNS LIVE IN THE SUBURBS
Major infusions of capital are hitting certain Boston addresses, but the area’s highest valued private tech companies are
in the suburbs. Unicorns, or private companies valued over $1 billion, have grown in the western suburbs. DraftKings is
the only one located in the CBD.
TOP INNOVATION GROWTH LOCATIONS
Figure:
Each year Inc. Magazine reveals its annual list of the top 5,000
‘growth companies.’ This year, 149 of them are headquartered in
Massachusetts. Of note, the increase in growth firms located in
downtown Boston and along route 495.
RT.128
RT. 495
BOSTON
CAMBRIDGE
INNER SUBURBS
38%
23%
31%
3% 5%
43%
19%
21%
7%
10%
2014
36.1%
28.5%
29.2%
2.8%
4.9%
2015
2016
SEAPORT
Innovation Watch | Page 6 Innovation Watch | Page 7

5. Cambridge
Financial
District
Seaport
128
Central
Route
495
Inner
Suburbs
Effective
Rent
Average
Deal Size
TI
Package
Free Rent
Term
Building
Class
2015
2016
36,400
35,000
12,300
16,200
18,400
12,300
17,400
19,400
23,600
16,800
30,000
20,300$31.25 $31.00 $33.00 $46.00 $24.00 $25.00 $50.00 $44.67 $24.75 $30.00 $7.50 $22.00
4
Months
2
Months
1
Month
2
Months
3.5
Months
2
Months
2
Months
0
Months
3
Months
2.5
Months
0
Months
2
Months
7.5
Years
5.5
Years
4
Years
5.75
Years
6
Years
4.6
Years
6.5
Years
4.3
Years
6
Years
5.3
Years
5.5
Years
5.2
Years
A- A- A- A- B B B B+ A- A- B+ B+
$55.00
$35.75
$70.80
$48.50
$45.00
$38.25
$34.00
$30.95
$23.00
$18.00
$33.75$32.30
AVERAGE INNOVATION DEAL MID-YEAR 2016 VS 2015 SUBMARKET COMPARISON
While the Financial District is still dominated by financial, legal
and professional service firms, twice as many innovation
companies signed leases here than did in the Seaport in the past 18
months. 85% of those leases were in low-rise space – divided evenly
between class A and class B buildings.
In the past five years, innovation companies have flocked to downtown
Boston from Cambridge and the suburbs. The Seaport – or Innovation
District – was the first stop. But as the Seaport grew cost-prohibitive,
many smaller and newer companies found themselves in the Financial
District – where class B ‘brick and beam’ space was the top choice. When
that supply was depleted, class A low-rise space became the next best
option – mainly because it was abundant and economical.
But as the trend of migration into the Financial District has
continued, the supply of affordable space is beginning to dwindle.
A recent analysis of class A assets revealed that the vacancy rate in
low-rise space (6.8%) is half that of high-rise (14.6%). A tightening
low-rise market paired with 2015’s 30% spike in class B rents means that
some innovation companies are now being priced entirely out of Boston.
Once upon a time, 128 Central was “America’s Technology Highway.”
As its popularity grew, innovation companies clamored for space. By
the late 1990s, the rapidly growing tech community was leasing space
defensively – driving down the vacancy rate to a mere 4.0% by 1999.
But when the tech bubble burst, companies went bankrupt and entire
buildings sat empty - it took just a few short months in 2000/2001 for
vacancy to jump to over 20.0%.
Despite these extremes, 128 Central has retained its prominence. Giants
like Raytheon, Oracle and Thermo Fisher Scientific have maintained a
presence here while TripAdvisor moved into its new 280,000 SF Needham
headquarters last summer.
Over 30% of inventory in 128 Central has traded hands in the past 36
months. Drawing off the demand for space in the Seaport and Cambridge,
some new landlords are raising asking rents. Consequently, many
innovation companies in the market for space are priced out of viable
buildings. And much of this space is sitting empty. This stalemate is a
trend we’ll be monitoring in the coming months.
FINANCIAL DISTRICT
128 CENTRAL
Average Lease Size 16,200 SF
Average Effective Rent $48.50 Gross
Total Tech VC (last 18 months) $804M
Largest New Deal Bullhorn
100 Summer Street
77,550 SF
Vacancy Rate 8.4%
FINANCIAL DISTRICT AT A GLANCE
Average Lease Size 16,800 SF
Average Effective Rent $34.00 Gross
Total Tech VC (last 18 months) $574M
Largest New Deal Veracode
65 Network Drive,
Burlington
91,800 SF
Vacancy Rate 10.7%
128 CENTRAL AT A GLANCE
Average Lease Size 20,300 SF
Average Effective Rent $23.00 Gross
Total Tech VC (last 18 months) $345M
Largest New Deal Kronos, Inc.
900 Chelmsford St,
Lowell
435,000 SF
Vacancy Rate 16.4%
ROUTE 495 AT A GLANCE
Markets along route 495 tend to attract larger tenants – partly due to
lower rents and partly because of the availability of large blocks of space.
So it’s no surprise that the average innovation deal in this market was
close to 40,000 SF last year. While suburban space will never command
the premium rents of a downtown address, the average effective rent for
innovation companies has escalated 27% in the past 12 months to $23.00
PSF.
The most noteworthy event along the 495 corridor this year was Dell’s
acquisition of Hopkinton-based EMC. EMC owns its 1.7 MSF headquarters
in Hopkinton – in addition to 1.0 MSF in Franklin. The company leases an
additional 288,000 SF in Franklin and 328,000 in Bedford. The $59 billion
merger closed on September 7th. And while we don’t anticipate an imme-
diate impact on EMC’s real estate portfolio, ongoing divestitures by both
Dell (SonicWALL and Quest) and EMC (Documentum) mean that we will
likely see the effect of this merger in the next 12 to 15 months.
ROUTE 495
10%
13%
43%
28%
6%
Seaport
Financial District
Back Bay
Government Center
North Station
Other:
Charlestown
Fenway
Midtown
South Station
INNOVATION LEASE ACTIVITY IN BOSTON CBD
IN THE LAST 18 MONTHS
Innovation Watch | Page 8 Innovation Watch | Page 9

6. Endnotes
1
Hecker, Daniel E. “High-technology employment: a NAICS-based update.” U.S. Dept. of Labor and U.S. Bureau
of Labor Statistics. July 2005; 128(7):58.
2
Schumpeter, Joseph A. Capitalism, Socialism, and Democracy. New York: Harper & Brothers, 1942. Print. 83.
3
Rosegrant, Susan and David Lampe. Route 128: Lessons from Boston’s High-Tech Community. New York: Basic
Books, 1992. Print. 5.
4
Rosegrant and Lampe. 136.
5
Rosegrant and Lampe. 108.
6
Rosegrant and Lampe. 13-20.
7
Massachusetts Technology Collaborative. The Index of the Massachusetts Innovation Economy 2015/2016
Edition. 2015. 8.
8
McNichol, Dan. The Roads that Build America: The Incredible Story of the U.S Interstate System. New York:
Sterling Publishing Company, 2006. Print 148-149.
Innovation Watch | Page 10 Innovation Watch | Page 11

7. 225 Franklin Street, Suite 300
Boston, MA 02110 | USA
Ashley E. Lane
Vice President
Cushman & Wakefield
Direct Tel: +1 (617) 279 4570
Ashley.Lane@cushwake.com
Matthew B. Smith
Senior Analyst
Cushman & Wakefield
Direct Tel: +1 (617) 279 4589
Matthew.Smith@cushwake.com
Travis A. Crocker
Analyst
Cushman & Wakefield
Direct Tel: +1 (617) 204 4109
Travis.Crocker@cushwake.com
AUTUMN 2016