One silver lining for biotech companies in today’s constrained funding environment is that lab users now have more choices than ever when looking for space. In markets like Boston and south San Francisco, where new lab space was nearly nonexistent before 2021, there are now millions of square feet to choose from. In Boston alone, the life sciences vacancy rate is at a 15-year high of 17 percent, with 5.7 million square feet of direct space and 2.8 million square feet of sublease space available. However, these companies must ensure that their lab space can accommodate their scientific research and workflows.
With high borrowing costs, fewer funding rounds, and tighter operating budgets, cash-conscious biotech companies might find subleased lab space appealing. These real estate options offer conveniences like pre-built and furnished labs, shorter lease terms (often less than five years, compared to seven years for new labs), and potentially lower rents. Despite these conveniences, subleases contain several significant operational, technical, and financial risks that should give biotech companies pause before setting up research in someone else’s space.
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Why laboratory subleases are not one-size-fits-all
The first reason subleasing is not the best choice is that the facility was originally designed for a different company with their own unique research programs, standard operating procedures, and workflows. The sublessor’s technical requirements (such as air changes, power loads, vibration tolerances, and allowable chemical quantities) may differ significantly from those of the sublessee. Subleased labs tend to be conveyed in “as-is” condition, meaning everything from utility fixtures to mechanical connections and available power is often fixed. Property owners can deny renovation requests if they are inconvenient, logistically challenging, or costly. In the fast-paced world of research and development, biotechs may struggle to adapt these lab spaces, leading to setbacks in the progress of their scientific programs.
Subleases are often arranged with an existing biotech company who is vacating the space for a myriad of reasons. Negotiating direct leases with the property owner is not always straightforward or even an option at all, especially if the sublease arrangement only covers a portion of the sublessor’s space or a portion of the term. This situation threatens the smooth operation of research activities and could necessitate hurried and costly relocations if the sublessor closes or mismanages the agreement, causing significant interruptions.
Subleasing also introduces extra bureaucracy to property management. Sublessees must coordinate not only with their sublessor for daily lab upkeep but also with the owner. Conflicting guidance from the two parties on protocols, such as hazardous chemical management or loading dock access, introduces delays and uncertainty.
While the biotech industry traditionally relies on leasing or subleasing existing labs, there are now more efficient alternatives for quickly acquiring lab space. Flexible lab solutions that can be easily modified offer a more effective approach to establishing research and development facilities while prioritizing speed to research and preservation of capital.
Advancing biotechnology with better solutions
Biotechs must ensure that their space works for their science. For companies seeking the advantages of subleases but with the peace of mind of customized layouts and streamlined operations, turnkey, reconfigurable laboratory programs provide a versatile solution. Unlike static lab layouts in subleases, these programs offer infrastructure that can meet the specific requirements of a biotech’s scientific research without hassle or delays. These laboratory spaces also meet a variety of technical requirements, appealing to researchers for their flexibility in addressing important functionality. Lab technicians can precisely manage environmental conditions by fine-tuning mechanical systems, improving electrical setups for intricate and sensitive instrumentation commonly found in biotech research, and configuring plumbing systems to ensure a seamless flow of materials for wet lab demands.
This alternative model to research and development resourcing allows for additional benefits, such as shorter terms, so emerging companies can flex as their business or research evolves. Additionally, this model includes operational services and onsite assistance from technical experts that alleviate the burden that companies face in managing requirements like environmental, health, and safety (EH&S), overseeing waste management, and complying with regulatory standards.
Engaging with partners who can provide both lab space and a range of operational services enables companies to stay focused on their scientific endeavors. This translates into starting research more quickly, and spending more time focused on research, rather than space design and management.
Biotech organizations of any size or stage can easily reconfigure their labs to meet their objectives as they change, whether adjusting the scale and scope of ongoing research projects or pivoting entirely. The ability to quickly change a lab to align with a new research direction while eliminating the need to relocate saves time and money. Companies who use reconfigurable and adaptable labs can accelerate their studies, innovate, and maintain a competitive edge in an industry where every breakthrough has the potential to change the world.
