12/23/2018 Developer lab buildings

Developer lab buildings

09/21/2016 - 2:33pm by Greg Muth, Tsoi/Kobus & Associates

Design

Over the past several years, we have moved from having a glut
of available lab space in the U.S. to reaching lab building
occupancy rates of 90 percent to 100 percent in many leading
markets. In some areas, such as Kendall Square in Cambridge,
Mass., developers can barely build lab space fast enough to meet
the demand. So, we thought that it would be a good time to
explore what makes a quality developer lab.

WHAT’S DRIVING THIS TREND?

Many companies have moved away from the idea of the suburban
research campus and have relocated their research operations to
be within identified innovation clusters where groups of other
companies, universities and institutions are doing similar
research. These clusters tend to flourish in dense urban cores,
close to retail, housing and transportation in order to attract top
talent and be close to capital. In addition, smaller companies
have taken a greater role in discovery, and they too are moving
to these clusters. This has driven huge demand, primarily in
these well-established markets where demand has outstripped
supply.

Developers have stepped into this void and have been building
new lab space in these markets to support biotechnology
companies of all shapes and sizes. Tim Stoll, Vice President of
Development at BioMed Realty, says that his company has over
two million sf of lab space either delivered or in process in

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established and growing life-science clusters. The combination of

usually high-value real estate and labs which are expensive to
build means that there is an extensive amount of investment and
ground work that has gone into creating these spaces.

BioMed Realty's Center for Life Science Boston - designed by Tsoi/Kobus & Associates - is an example of a multi-tenant speculative lab building in
the Longwood Medical Area Life-Science Cluster in Boston. Image: Jeffrey Totaro

A wide variety of financial factors weigh into owning and leasing

lab space. Rather than delving into that aspect of labs, we will
focus on what distinguishes different characteristics of the
different types of space out there. According to Stoll, an
experienced developer provides what the market needs. "That
demand can range from a cold, dark shell to a warm lab shell to a
fully built space, depending upon the market and the tenant. We
work with our tenants to ensure that we collectively make the
right amount of investment,” Stoll says. “Often, that means
building in flexible modular base building systems to a certain
point, and then planning or leaving room for additional modules
or supplemental units over time. As long we allow for sufficient
clear heights, the shaft space and control zones, we can solve
many program needs on a case-by-case basis more efficiently
over time than building in excess capacity on day one."

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So what types of lab space are out there and available for you to
lease? We've categorized these options into four different types:

Speculative labs
Build-to-suit
Conversions
Incubators

SPECULATIVE LAB

In this approach, developers build speculative lab buildings

tailored to the current market without necessarily having a tenant
to lease the space initially. Once the core and shell of the building
are completed, lab tenants lease all or part of a floor or the
building and fit out the empty shell with lab space that meets
their unique requirements. These buildings tend to be multi-
tenant facilities, where life science companies are often able to
expand within the same building. But here's the catch: an
experienced life science real estate developer will provide a
flexible warm shell with utilities that are appropriate for a modern
lab, while less experienced or under-financed developers may
only provide four walls and a roof (a cold shell). Not all shell
space is created equal, which means that whatever isn't
provided initially will become the tenant’s responsibility. Nor are
all building floor plans created equal. You need to look at what
dimensions of lab module can be accommodated and what floor-
to-floor height is available. Are there columns that interrupt the
lab? Is the floor plan flexible enough to be able to house a variety
of lab configurations? A developer may show you a plan that
works for you now, but how easy will it be to change to meet
your future needs?

Some developers are offering lab modules as narrow as 10 ft.,

which can become very tight once you attempt to place large
equipment, such as fume hoods and freezers, inside the lab,
while other developers are offering lab modules up to 11-ft. wide.
For floor-to-floor heights, we prefer buildings in the range of 14-
ft. to 16-ft. in order to allow for the distribution of ductwork. By
contrast, a typical office building may have a floor-to-floor height
of 11-ft.' to 12-ft. Lower floor-to-floor heights can be made to
work, but this adds cost, decreases flexibility, reduces efficiency
and provides lower quality space.

Quality matters. Gone are the days when labs could be stuck into
windowless, tilt-up, concrete warehouses in industrial parks.
Organizations are competing fiercely for talent and lab spaces
now need daylight and views, and researchers are demanding
amenity spaces. Stoll said that "Today’s researchers expect to be
connected with their peers and their community. In vibrant areas
like Kendall Square, amenities may be limited to a spot to park
your bike, a shower and a place to grab your coffee. In suburban
locations, the amenities are more abundant, but generally trend

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appears to be toward providing more options for eating, meeting

and working out closer to the office."

Infrastructure is critical in a lab building, and the infrastructure

demands become even more acute with multi-tenant facilities.
For example, lab buildings require redundant service elevators to
facilitate the moving of chemicals and equipment, as well as
multiple loading docks and dumpsters and rooms for the storage
of hazardous chemicals and chemical waste.

Utilities are another differentiator of good lab space. A proper lab

facility needs to have adequate HVAC delivered throughout the
building. This can be particularly challenging in a speculative
building because you don't have an existing tenant whose needs
are known. The key, once again, is designing systems that can be
flexible. Different types of research will have different air flow
requirements, and different approaches to heating and cooling
requirements also influence the demand for HVAC. Systems must
be able to ramp up to handle hood intensive chemistry and also
be able to ramp down to handle dry labs, and they need to do
both tasks efficiently. A developer doesn't need to install the
capacity to provide maximum CFM from the start, but the system
must have the flexibility to expand as the building fills or
researchers’ needs grow. Space is required inside of shafts to run
specialty exhausts and also on the roof to locate the fans, and
this is typically included in the rent paid by the tenant.

Labs are also big users of electricity, so you need to make sure
that the electrical service is properly sized to meet your demand.
Emergency power for freezers and other lab equipment is not
typically provided by the landlord, so you need to make sure of
adequate space for a generator and its fuel tank. A well-designed
lab building from an experienced developer will usually supply
compressed air and vacuum, but once again room for important
equipment like purified water skids, nitrogen tanks or dewars,
and acid neutralization systems needs to be available. If not, it
becomes the tenant's responsibility. Just imagine carving a shaft
through every floor above you in order to run ductwork, or giving
up a corner of your floor so that you can get in an additional air
handler. This is the hidden price you can pay in a building not
properly designed for labs.

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BUILD-TO-SUIT

The build-to-suit approach is when a developer has reached a

deal with a tenant for an entire building before starting
construction. As a tenant, you have the ability to have the
developer build the building to your specifications, including the
right module size, the right floor-to-floor height and the utilities
you need. In many cases, ownership of the improvements reverts
to the tenant after the lease period expires.

If a build-to-suit sounds an awful lot like building your own

building what is the difference? First, the capital outlay is spread
out over many years, which is not the primary difference. The
fact is that developers own and control most of the land inside
the hottest innovation clusters. According to Marie Gasparro,
Assistant Director of Facilities Planning at The Broad Institute in
Cambridge, the primary reason that they utilized a developer in
building their facility was simply that "the developer owned the
land that we wanted to build on." Typically, developers have
entitlements in place and are adept at navigating the approval
process. Gasparro said that "up until this point, we had only self-
managed renovation projects, the developer took care of things I
had never even heard of in the approval process so that there
were no surprises."

A developer brings a wealth of lab construction experience that

simply doesn't exist in many small to medium size organizations.
"On our project" says Gasparro, "the developer was really handy
in the VE process, especially in regards to MEP systems and
helped us take a significant amount out of the project cost." This
was true in conflict resolution during construction as well: "They
just carried a bigger stick than we did," she says.

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Can an experienced lab developer build at a lower cost?

Absolutely, says Stoll. "Like all skills, an opportunity cost arises
when trying to learn or become an expert at a task. Constructing
a build-to-suit from the ground up is something that requires end
user feedback and buy-in, and we've found the client’s time is
best spent when invested in research or other core business
efforts, not worrying about real estate."

However, build-to-suit is not necessarily the right fit for smaller

companies with limited space needs. For example, depending on
the location, limitations on the size of the building a developer is
willing to build for a single tenant may be a consideration.
According to Stoll, "The scale of a project is dependent upon the
location and the opportunity. We are more focused on investing
in research facilities that will support the life science industry for
the long term than building for a single client for the short term."

CONVERSIONS

We have seen developers convert other building types to labs,

including offices, warehouses and shopping malls. There are
striking examples of labs that have gone into repurposed space.
But, these are the exceptions, not the rule. We started identifying
some of the criteria that make good lab space earlier in this
article. In some specialized cases the repurposed spaces can
meet these requirements, which can reduce the total cost of the
project. If an existing non-lab building can't meet these
requirements, the building still can be repurposed into lab space,
but compromises will be required. If the floor-to-floor height is
too low, ceilings may have to be lowered or mechanical spaces
created on the floor to run ductwork. Inefficiencies may be
created, while columns and shafts may pop up in unexpected
places. Where conversion projects fall short is in the provision of
infrastructure because adding a new service elevator or a new
loading dock to an existing structure can be very challenging,
which means that these shortcomings become your headache as
a tenant.

Conversions offer the opportunities for some very striking spaces,

good locations, and shortened schedules, but they also present
the risk of compromised space so be very careful.

INCUBATORS

Incubators are traditionally lab spaces intended for smaller and

startup companies. Developers rent space to users by the bench
or by the lab, and for durations as short as just one month, with
most companies staying just a year to a year and a half to get
their pipelines off the ground.

Incubators are more than just labs for startups. Typically, an

operator or accelerator affiliated with local development agencies
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or local universities provides additional services and management

beyond those provided by the developer, such as lab equipment
and EH&S that a young, emerging biotechnology company simply
can't afford. In addition, accelerators provide a network of
entrepreneurs, business coaching, and VC support. When looking
at incubator space, make sure you are getting the fullest package
possible along with quality lab space.

CONCLUSIONS

As long as the trend to move research to urban cores continues

(and we are seeing this happen with innovation cores developing
in places ranging from New York to Oklahoma City) researchers
are more and more likely to find themselves in developer lab
buildings. Experienced lab developers have found that it takes
more than just slapping a high-tech facade on a building and
calling it lab ready. They are building labs that, like BMR's Center
for Life Sciences Boston, are flexible, with extra floor-to-floor
height, proper bay spacing and utilities sized for modern
research. They are building labs where companies want to be and
building buildings that researchers want to work in.

But don't fall into the trap of thinking that all lab buildings are the
same. Not all developer lab buildings are created equal. Make
sure the space works now as well as in the future. Make sure the
building has the infrastructure you need and can efficiently
provide the utilities you need. At the end of the day, the deal
with the lowest rent and the biggest TI allowance may not always
be the best. Work with a developer experienced in building
laboratory buildings and utilize the expertise of an experienced
lab planner to guide you through the process.

Greg Muth is senior science and technology project manager at

Tsoi/Kobus & Associates in Cambridge, Mass. www.tka-
architects.com

Design

RELATED READS

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operational program
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Professional Pro le:

Stephen Palumbo,
AIA, LEED AP

Oncorus Inc.,
Cambridge, Mass.

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