Pre-Built Labs Are Essential in Emerging and Established Markets

By: Brooks Slocum

With vacancy rates approaching zero in established markets like Boston, and increased momentum in emerging markets such as New York City, the Life Science market is often restricted by a lack of available research-ready laboratory space. That’s why the experts at industry-leading architecture and interior design firm SGA are advising owners to invest in pre-built labs. These ready-to-occupy laboratories—which have lab-ready infrastructure, casework, and equipment in place when they go to market—are the recommended way to attract Life Science tenants with immediate research needs. 

“Start-ups want to move in as soon as they secure their funding,” explains Brooks Slocum, AIA, SGA’s New York Studio Director. “Typically, tenants in emerging clusters have limited runway and bandwidth to allow for extensive lease negotiation and design and construction timelines. We’re finding that many of the experienced Life Science owners and developers are choosing pre-built laboratories as a way to market their facilities and accelerate leasing activity.” Of course, the owner also benefits: Start-ups will pay a premium for pre-built labs because of the convenience.

Additionally, Slocum says, construction of pre-built laboratories is the best way to enable the local Life Science field to grow, because step-out or graduation space is the next type of facility that start-ups typically require as they exit accelerators or incubators and begin receiving capital. “In an evolving market, where there isn’t a lot of lab space available, pre-built labs have become the preferred method for creating momentum. Another benefit to owners is that as the original tenants vacate those laboratories in favor of larger ones, the pre-built labs can be leased again, with minor modifications, to new tenants. Pre-builds are the fastest way to attract tenants that need space in order to conduct research.”

Some developers view the construction of pre-built labs as a way to transition a commercial building into a Life Science facility as space becomes available. But he says that, given the strength of this market segment, it is important to prepare for growth. “When repositioning a building, we recommend studying the building’s full conversion potential to establish a plan for accommodating additional lab fit-outs once existing leases expire,” he says. “Often, a Life Science tenant that starts in a smaller laboratory will soon find they have additional space needs. It is advisable to be prepared to accommodate the increased requirement.” 

Slocum agrees. “If you’re going to pre-build a laboratory and convert your building to Life Science, you should consider the entire building prior to fitting out a single floor. Ideally, the building should be capable of being fully fit-out to 100% lab ready. But if you are going to do a staggered or progressive evolution of the building, you don’t need to put all of the equipment in at once. You start with the pre-built labs, and then you make sure that you have the infrastructure ready for the building to convert over time.”

There is an upfront cost of pre-building labs to the owner or developer, but the upside benefits are more valuable: Tenants are attracted by other tenants, creating a community of like-minded individuals. That’s why Slocum and others at SGA are recommending pre-builds to any developer eager to get into, or grow their investment in, emerging Life Science markets.