Overcoming Challenges in Lab Space Selection as a Biotech Start-Up: Insights from Savills

Launching and growing a biotech start-up is an exciting journey, rife with challenges that can be as daunting as they are essential to overcome. From grappling with uncertain futures to navigating the complexities of infrastructure, the voyage to scaling up laboratory operations demands strategic foresight and careful financial management. 

eLabNext recently interviewed Savills, a global commercial real estate firm with over 40,000 professionals collaborating across 70 countries, whose Boston North American Life Sciences team provided valuable insights on the importance of understanding each start-up client's specific infrastructure needs and conducting meticulous due diligence during site selection. Below, through the lens of Savills' expertise, we uncover the challenges and opportunities shaping the future of laboratory expansion in the life sciences industry.

The Challenges of Navigating Laboratory Growth

Many early-stage start-ups face endless difficulties as they plan to initiate or expand their operations. Planning future facilities requirements when a company’s growth, technology, and science are still developing requires significant financial investment and risk management.

Building out laboratory space comes at a considerable cost, especially for early-stage companies that want to balance the investment in their space with the risk of unforeseen challenges, data, and unpredictable fundraising. Labs also have unique facility requirements, including HVAC systems, utilities, water purification systems, and waste management—all of which are critical to safe and efficient operations. 

In addition to these hurdles, fundraising rounds are smaller and taking longer than in previous years, and timing investments in capital, talent, and laboratory space is critical to ensuring an organization's long-term financial health.

Choosing a Lab Space

When choosing a lab or company space, several crucial aspects are often overlooked. While bench space and the commute are usually the most top-of-mind, the accessibility of infrastructure and strategic location choice are essential to consider. 

For example, state and local incentives, start-up programs/grants, and access to skilled, market-specific talent can significantly affect long-term operational costs. Additionally, the presence of critical lab infrastructure, such as shared services and utilities in a facility, can substantially impact operational efficiency and cost-effectiveness. 

Moreover, scalability, flexibility, and efficient lab workflows are paramount for future growth and optimization of space utilization. Exploring avenues like subletting space and phasing construction can further maximize resources and leverage tenant improvement allowances. 

Lastly, partnering with sophisticated life science landlords with a track record of providing quality lab spaces can facilitate growth within their portfolio, fostering a conducive environment for innovation and collaboration.

Fostering Collaboration

Successful innovation in the life sciences relies on collaboration across multiple personnel with unique skill sets, from wet to dry labs. When planning a new lab space, providing scientists with dedicated areas for data processing, electronic lab notebook entry, remote experiment monitoring, and hybrid or remote meetings are pivotal for maximizing productivity and creative thinking.

Employees often utilize various spaces throughout the day, including lab benches, specialized equipment rooms, assigned desks or offices, conference rooms, and collaborative seating areas, reflecting the diverse needs of modern work styles and activities. Collaboration-promoting organizations strategically design lab and non-lab workspaces to optimize workflows between teams and accommodate alternative work styles, cultivating an environment conducive to interdisciplinary teamwork and company culture.

More Progress with Less Money

Labs need to strategically use their capital, maximize efficiency, and conserve resources to navigate the shifting investment landscape post-pandemic.

Upfront programming and lab planning can help start-ups determine the minimum square footage required to accommodate both the scientific needs and projected growth of the company. Strategists from lab space providers can actively research and identify opportunities for non-dilutive funding sources, providing invaluable support for sustainable growth. In addition, a team of experts, including brokers, lab planners, strategists, and project managers, can provide continuous guidance and due diligence, from site selection to budget estimation and timeline management. 

By developing comprehensive equipment lists and lab and office programs, start-ups can ensure their lab space is optimized to meet the company's needs while defining the necessary building infrastructure to support these requirements. 

To further alleviate upfront capital expenditures, brokers negotiate favorable terms, including tenant improvement allowances, flexible lease terms, and phased rent payment schedules. These advantageous concessions enable start-ups to conserve resources and make the most of their funding, ultimately fostering long-term sustainability and success.

Accommodating the Start-Up Landscape with Accelerators and Incubators

The rise of incubators and co-working spaces during the COVID-19 pandemic has shifted the real estate market.

These innovation hubs offer flexible solutions for early-stage startups. They provide an ideal environment for rapid scaling and hypothesis validation, which is crucial for securing IP and investments. Moreover, they present many location options and diverse service levels, catering to the varying needs of startup clients. 

As their popularity soars, life science real estate firms are adapting. An increasing number are providing labs delivered on spec to accommodate startups that lack the time or resources for full lab buildouts. This trend not only enhances accessibility but also contributes to the overall vibrancy and innovation within the real estate sector, ushering in a new era of collaboration and creativity.

Conclusion

Launching and growing a biotech start-up is a thrilling yet arduous endeavor, fraught with challenges that demand careful navigation and strategic planning. From grappling with uncertainties in technology and science to managing the complexities of infrastructure, the path to scaling up laboratory operations requires meticulous attention to detail and prudent financial management.

Having a seasoned real estate team, such as Savills, that understands each client’s specific infrastructure needs and performs due diligence during site selection is essential to managing the risk and expense in establishing and scaling up laboratories. Savills recent blog article further explores the drivers that are shifting the life science real estate narrative and the impact on labs. Meet the Boston Savills Life Sciences team, Chris Gorczyca, Eve Jeffries, Nick Beati, Sharon Wilhelm, and Austin Barrett (not pictured), and learn even more about their capabilities as strategic real estate advisors by contacting lifesciences@savills.us.

Digital lab platforms (DLP), like eLabNext, can also help start-ups improve the efficiency of their operations and infrastructure. Contact us today to learn more about our DLP.