The Shortage of Lab Space in the United States Is Stifling Innovation A shortage of appropriate facilities and lab equipment to meet the needs and labor requirements of U.S. life sciences companies, joined with swiftly growing rent prices, many scientists are facing tough times.
By Anton Lucanus Edited by Chelsea Brown
Opinions expressed by Entrepreneur contributors are their own.
The life sciences sector reported a record $70 billion of private and public capital investments in North America for 2020, a 93% increase from 2018, which held the previous record of $36 billion. During just the first three months of 2021, life science corporations had raised a record $12.2 billion. The market trajectory accelerated throughout that of 2020 and into 2021— with the demand for products in the industry surging as well.
With a shortage of appropriate facilities and lab equipment to meet the complex and specialized needs as well as labor requirements of U.S. life sciences companies, joined with that of swiftly growing rent prices across established United States life science clusters, many scientists are facing tough times. As science has evolved, primarily due to the reducing cost and increasing speed of DNA sequencing and synthesis, there has been an explosion in new Biotech businesses.
Space struggles facing the Biotech industry
Biotech businesses have had to tap into a decades-old infrastructure model and wait for new lab spaces to open up. Waiting lists and high costs ensue. Fundamentally, the talent pool for new bioengineering is global, but the availability and access to good quality lab space, reliance on commercial landlords and the scientific ecosystem have not kept up with the pace. Current options are limited and rooted in cities that have always had a life sciences or pharmaceutical stronghold.
Roger Humphrey, Executive Managing Director and leader of JLL's Life Sciences group, said, "Expensive and competitive real estate markets are forcing life sciences companies to explore creative real estate options to drive innovation and productivity in their workforce." Humphrey continued, "In the most sought-after life sciences hubs, fierce competition for space and talent is leading to the development and renovation of new space, both where you might expect it and in surprising locations where adaptive re-use conversions result in energizing new space."
MBC BioLabs, Lab Central and Biolabs provide reliable rentable bench spaces. However, there is generally a significant wait list, vetting process and high rent rates that have become synonymous with the industry. The problem that many scientists face is that most incubators do not have any national reach or decentralized network of labs, and some of them take equity in exchange for lab space from startups.
Conversion of offices to labs
According to a report from Newmark, outsized rent growth has led to attractive returns, which have made lab spaces extremely appealing to investors and asset owners. While the increase in remote work dealt a blow to landlords of office buildings, the demand for space from the scientific community rose, which resulted in over 20% of new laboratory spaces that are being built from conversions of offices. The numbers display a classic supply and demand situation, since scientists are unable to perform their duties from their homes or via IP telephony.
Liz Berthelette, Newmark;s director of research and co-author of the report, said, "The pandemic shone a brighter light upon the industry, and the global community is now looking at life sciences and health care in a different way."
Lab space shortage sparks creative solutions
Johns Hopkins and the University of Maryland provide scientists with leasable wet labs at various sites around the city. This includes their affiliated business incubators, which aid in the commercialization of ideas that come from the institutions. However, both institutions are at full capacity. University and city development authorities have stated that they are struggling to convince developers to take on new life sciences real estate projects — since these are expensive and intricate to build out.
Jane Shaab, executive director of the University of Maryland BioPark, said, "A developer wants fail-safe leasing, and to then carry that leasing package to [the] bank and say, 'This is a project you can't resist. Open the fund flow, and let's get going.'" Shaab continued, "How do you encourage developers to be more flexible, more risk-affectionate as opposed to risk-averse?"
Dupla.Bio, on the other hand, is a new lab space solution that is looking to create a network of small hubs across the U.S., as well as internationally, where scientists will be able to select a location and customize a private lab, which is then built and assembled "just in time." These labs are within a cluster — a key community hub — with approximately 40-50 scientists from different companies. The idea behind the project is to provide scientists with a dedicated private space, without isolating them from the wider community.
The company currently has two products in the minimum viable product stage: the BioDome, which is a geodesic dome that is a scalable and modular design that houses space for 3-6 scientists, and the Mobile BioLab, which has a BSL2 specification container BioLab on a chassis that is attached to a truck for mobility. It is designed to be a plug-and-play lab for those who have their own space to locate the lab.
Ivan Rodriguez Jaubert, co-founder and CEO of Dupla.Bio said, in a science networking event I attended, that "The key to keeping the costs down is a scalable design system, whereby each lab can be rapidly assembled on demand. Customers will be able to select the size of their lab, the number of benches, equipment, and other items that make it specific to their needs. There is no sunk cost for equipment that you never use, you only pay for what you use."
Co-founder and COO Jonathan Rix added, "We aim to create a marketplace of brokers and landlords to post their available warehouse space across the US. We want to break away from only renting or creating custom-built bricks and mortar labs in SFO, San Diego, Boston. We want to challenge the status quo and make the availability of great quality lab space more diverse. For us, this means using under-utilized spaces and warehouses are the perfect shell to house a community of scientists and their private BioLabs."
The cost of renting a space, especially a highly specialized one such as a lab, is becoming increasingly more difficult to afford, moreso in densely populated cities. In order for innovation to thrive and develop, scientists require a place that will allow them to work effectively and efficiently without having to spend most of their budget on rent. Innovations like Dupla.Bio are helping to solve this crisis.
