The biggest cost for most businesses is either personnel or real estate. This is no different for biotech and medtech because laboratory space is very expensive. However, it can be difficult to understand the reasons why lab space costs so much more than other types of facilities.
One reason for this difficulty is because scientists are rarely exposed to the cost of lab space during their education. A professor who wins a grant from the government, for example, will receive funds to be used directly for their research. The university where that professor works will also receive funds to cover the costs associated with supporting that professor’s research, which includes the lab space, utilities, administration, etc. Thus, neither the professor nor his or her lab members see the cost of the academic laboratories they are using. If a lab member then goes on to start a company that needs lab space, it’s not surprising that they might experience “sticker shock.”
According to a popular real estate website, office space in Orange County, CA costs on average $2.78 per square foot. In comparison, the national average cost of laboratory space was $24.60 per square foot in 2015. That is a ten-fold increase, and in Orange County the price is likely higher. Why is there such a large difference?
Laboratories cost more to build and to operate. The higher building costs come from the ventilation, electrical, plumbing, and materials requirements. Operating costs are higher relative to office space due to many factors including energy, waste disposal, safety compliance, maintenance, receiving, and more. These costs are important for any biotech or medtech company to understand when shopping for laboratory space. Read on to learn more about the cost of owning and operating laboratory space.
The first costs that begin to add up in a lab space are related to the facility’s infrastructure. When constructing or retrofitting lab space, the airflow systems, electrical systems, plumbing, and furniture all tend to be relatively expensive.
Laboratories generally require more heating, ventilation, and air conditioning (HVAC) units and/or more powerful units than an office does. This is due to higher ventilation requirements and the need for different types of airflow in different areas of the lab.
Because labs use a fair amount of electricity (described in more detail below), the electrical systems that are initially installed have to be able to handle the demand. Plus, not all buildings have enough electricity supplied to them to support a lab, and the process for adding more can be expensive. It may involve permitting, planning, and construction expenses. Furthermore, as biological laboratories tend to store samples in freezers, the power systems in a lab should ideally have a backup. Backup generators can cost upwards of $200,000 and may also require special permits to install them, depending on the city.
Plumbing is an expensive part of the infrastructure due to the materials used. Water is run through copper pipes which are costly, and laboratories tend to require more sinks than other types of facilities, which corresponds to more pipes. Furthermore, laboratory water must be highly filtered, often necessitating on-site deionization systems and point-of-use ultrapurification. These systems and their consumable components are expensive. The filter for an ultrapurification system can easily cost over $600 and last for only 6 months.
Furniture is another category in which laboratories must spend more money. Due to the potential use of caustic chemicals, lab benches are usually made of highly resistant materials. Lab benches can easily cost hundreds of dollars per linear foot, even without upper shelves and other accessories.
Lab space is expensive not only on a rent per square foot basis, it is also costly to run. While operational expenses will vary widely depending on what each specific company does in the lab, these are some costs that most lab users will incur.
The energy costs in a laboratory can be between $5-$16 per square foot according to the National Renewable Energy Laboratory website. The U.S. Energy Information Administration showed that in 2012, office buildings used on average 15.9kWh/sqft while laboratories used 40.8kWh/sqft, or a 2.5-fold difference.
Some of the items that contribute to this high energy cost include fume hoods, which due to the need to move air constantly through them can use as much as 2-3 houses’ worth of energy. Freezers are also significant power users, with ultralow freezers requiring about as much energy as an average home. Lights can also need significant power depending on whether they use energy-efficient bulbs, and as scientists often work longer hours than the average office employee, these costs will also be higher. Most office buildings run their air conditioning and heating systems only during normal business hours, but laboratories may require stable temperatures around the clock depending on the type of work being done and the hours that the scientists keep.
Much of the waste that laboratories produce cannot be disposed of in municipal waste. Instead, most laboratories contract with specialized waste disposal services that pick up, track, and dispose of various waste streams.
The most common types of specialized waste in a lab are biohazardous waste and hazardous chemical waste. Biohazardous waste is frequently generated by labs that work under Biosafety Level 2 (BSL2) conditions. As BSL2 is required for working with materials that have the potential to cause human disease through liquid transmission, the wastes coming from this work must be disposed of safely such that they can no longer infect someone who comes in contact with them. This is generally done through incinerating the waste. Costs for waste pickup and incineration can range greatly, but start around $1 per pound of waste, plus pickup fees of $100-150. Disposal companies often have a minimum number of pounds they charge for per pickup, so if the minimum is 40lbs and a lab gets 2 pickups per month, that’s at least $280 per month. As the amount of waste generally increases with the activity of the lab, these costs can easily exceed $2000 per month.
Hazardous chemical waste costs even more to dispose of, as disposal methods will vary depending on the specific hazard type. A few liters of flammable organic solvents can end up costing $700-$800 to dispose of. Each additional type of hazardous material will incur not only volume-based charges, but also charges for the separate vessels they require for transport. One potential cost-saving solution might be to have waste removed infrequently, so that the transportation charges are minimized, but there is a time limit for storing hazardous chemical waste on-site. According to the Environmental Protection Agency that limit is 180 days for non-acutely hazardous wastes, but state and local laws may be more restrictive.
The Occupational Safety and Health Administration (OSHA) puts forth standards that are enforceable as law in regards to workplace safety. Many states have their own agencies that develop additional regulations, such as Cal/OSHA in California. As the regulations are numerous and change from time to time, all employers spend some time working to achieve compliance. However, laboratories have many more regulations to follow than the average office, and OSHA violations can cost tens of thousands of dollars. Therefore, labs have to either hire environmental health and safety consultants or have an employee spend a significant portion of his or her time taking on this responsibility. The national average salary of an environmental health and safety consultant is approximately $92,000 per year, which is almost $50 per hour. If the consultant works for a firm, the cost to the lab will likely be higher.
The tasks that fall under environmental health and safety include monitoring hazardous waste streams, performing safety checks on the laboratory, arranging complete safety training for new employees, arranging annual safety training for all workers, keeping training and incident records, performing evaluations of systems in the lab to determine if there are safer ways to carry out a task, performing risk assessments for new laboratory procedures, maintaining OSHA documentation, monitoring hazardous material inventory and reporting to appropriate environmental agencies, and more. Depending on the size of the company, complexity of procedures, and hazard level of substances used, this can easily be a full-time position.
Making sure that the building’s infrastructure is well-maintained is especially necessary for labs. While an office may experience a slight decrease in productivity if the water stops working, in a laboratory thousands of dollars’ worth of work could be lost if that water is needed to complete an experiment that has already begun.
Thus, managing the facility such that work can continue uninterrupted is important. Some aspects of this may be handled by a building’s owner, but a lab has so many specialized systems which require maintenance that facilities management can take a significant amount of time. The average facility manager in the US makes about $98,000.
Even for a research and development lab that does not have to abide by ISO standards, equipment maintenance is important. From preventative maintenance contracts to periodic maintenance tasks to making sure broken items are fixed quickly, keeping equipment up and running is an essential task in a lab.
Some types of equipment, such as freezers and incubators, also require monitoring. Digital probes can be used to record the temperature within the equipment. Generally the data is uploaded regularly to an online application that an employee can check and/or be notified by if the equipment is functioning outside the set parameters.
Costs for equipment management vary greatly depending on the type and amount of equipment, but these tasks are often performed by a laboratory manager. The national average salary for lab managers is about $44,000 per year.
In laboratories, shipments tend to arrive daily. Although it is sometimes possible for scientific staff to sign for packages as they arrive, it can be highly inconvenient to have to stop in the middle of an experiment, remove PPE, and go sign for a FedEx delivery. Signing for packages, interacting with vendors, and monitoring who enters and exits the lab are all tasks that a receptionist can perform and that add to the expense of operating a lab.
Moreover, some reagents that are used in labs require refrigeration or freezing upon arrival, so it is not only important to have a person available to sign for packages, it is also important to see that those packages are stored appropriately. Cell lines, for example, can easily cost thousands of dollars for a single vial and are among the most essential to store quickly and correctly. Therefore, having reception staff who can sign for a package and either unpack it themselves or deliver it to the appropriate scientist for storage is a necessity for many lab-based companies. Receptionists make around $27,000 on average nationwide.
The need to transmit information via the internet is not relegated solely to labs. However, as biotech and medtech can deal with large files, the associated costs may be high. Not only do large files require significant internet bandwidth to transfer, they also require high speeds so scientists aren’t waiting unnecessarily long times before receiving their data. For the data produced in some experiments, transmitting via WIFI may not make sense even with good upload speeds and bandwidth. In this case, some labs can use a wired connection, requiring an information technology (IT) consultant.
Additionally, a life sciences company’s intellectual property can be one of its most valuable assets. Strong IT security practices can help to ensure that the intellectual property is protected.
Laboratory space is expensive. For any company that is in the market for laboratory space, all of these general requirements plus the company’s own unique needs should be accounted for. Many startup life sciences companies don’t need their own laboratory space until they have reached certain R&D milestones or grown to a certain number of employees—this is why incubators have become popular. Once a company does need their own space, those who already know what costs to expect will be able to plan for them.