Should a life science company convert a flex or office space into a lab to save money?
When looking at lab space in New Jersey, a startup company may feel the asking rental rates for ready-to-go spaces are higher than they would like to pay. Some may think it prudent to find a flex or office space and build a lab from scratch to accommodate their lab use. If they convert a flex or office space into a lab will they save money? The assumption is that leasing a space with a lower base rental rate will be a cost savings for them. To properly evaluate this option and make an educated decision, it’s best to have a minimum of 6-8 months lead time to accurately ascertain the occupancy cost for each space you’re considering.
3 Factors for a Life Science Company to Consider
1. Plausibility
Zoning ordinances should be checked with the local municipality to ensure the use and storage of certain chemicals, manufacturing and or processes are allowed. A flex building not built specifically to house lab users may not be able to accommodate the utilities/power and waste removal systems needed to support any specialized equipment and processes. Safety regarding proper air flow, cross contamination and general cleanliness may be a concern with other industrial uses in a multi-tenanted building. Security and loading capabilities may also present an issue.
2. Cost
While the base rent may be lower in a flex building, additional costs to create infrastructure and the interior lab buildout may be higher than anticipated. Existing MEP (mechanicals, electrical and plumbing) to support air flow, lab gases, etc. may not be adequate and very costly to upgrade. Additonally, the actual buildout of lab benches and hoods with proper ventilation must be factored in for the finished space. Furthermore, landlords may not advance funds for modifying space if your company is brand new and has no credit history. Considering lab buildouts can be more expensive than office or flex buildouts, this could prove problematic.
3. Timing
Time of deliver may be difficult to ascertain. Many towns not currently familiar with lab build outs may present extensive delays with inspections and approvals from the township in order to receive occupancy certificates. In addition, you must estimate the time and attention necessary to manage the conversion and construction project which may detract from your primary business.
After carefully evaluating all options you can better decide the best course to follow to meet your space needs. With actual information for modifications for each building and space you can make accurate comparisons for your true occupancy costs.
Please call for more information about available laboratory space in New Jersey.
Jeanne Sabo Rothenberg, CCIM
Vice President
NAI DiLeo-Bram & Co.
Cell: (908) 377-9004
www.commercialrebroker.com
jrothenberg@naidb.com