Academic and government labs are increasing their lab build rates with higher demand pushing lab construction costs to uncharacteristic new highs.
The small increases seen in R&D laboratory construction costs over the past several years have been overwhelmed by escalating economic forces since late-2004. These increases have resulted in an overall cost increase of approximately 6%, according to an annual study1 by HLW International LLP and AccuCost Construction Consultants, both of New York, N.Y. This increase is about twice that seen in previous HLW studies in recent years.
Driving forces
Economic factors affecting this year's larger increase include:
Inflation and cost escalations in the construction industry.Increased commodity prices—steel, cement, and petroleum-based products—and foreign demand putting pressure on continuing increases.Increasing labor costs.Large volume surges in construction activity, creating a suppliers' market.
Over the past several years, the pharmaceutical industry drove much of the growth in lab construction. This sector, however, has cooled recently as large pharmaceutical companies look to consolidate what they have. This slowdown, though, has been more than replaced with increased capital spending by academia and government agencies. Academic spending has been targeted at supporting new technologies and retaining control of the intellectual property these institutions create. Government spending has been primarily focused on bio-defense.
Also putting pressure on construction costs is an increasing number of new regional research centers. In addition to the traditional centers like Cambridge, San Francisco, Seattle, and San Diego, there are now more than 40 research hubs in the U.S. as each community tries to grab their share of the research market.
As seen in the accompanying tables, the costs in local markets vary, however the price escalations are national and so all costs will continue to increase. In fact, all costs appear to be approaching the New York index rate. Regional variations are mostly attributable to labor costs and productivity issues.
Seven signs
The HLW/AccuCost study points out seven issues and dynamics that appear to be affecting future research facility design costs.
Excess R&D facilities in the pharmaceutical industry pose several dilemmas for their owners. These campuses generally are difficult to break up; they're anticipated, but never quantified; and the existing buildings have a lower cost than building new facilities (which forces down lab construction costs).An increasing number of new science and technology (S&T) entrepreneurs provide both up- and downward cost pressures on lab construction. In some of these situations, start-up entrepreneurs are capital starved, while in other situations there are entrepreneurs who are "free-agent trophy scientists" (well-recognized scientists who are aggressively recruited). These two categories have often opposite effects on lab construction demand, and the resultant cost effects.An emerging market within this category is that of the enhanced-use leasing laboratory, where labs are owned and maintained by someone other than the primary investigator. While this is a small category at present, this market is likely to have a positive impact on new lab growth, thus providing pressure for increasing lab costs.An increasing mission of performing more varieties of research and an increasing demand for biocontainment is increasing demand (and costs) for new labs. These labs are generally more expensive to build and operate and have operational risks.The growing pressure for flexibility in lab designs, with rapid swings from biology to chemistry and vice versa, is having a questionable effect on lab construction costs. There is a minimum cost effect for sizing ductwork and leaving space for specialized devices.Increased implementation of vivarium facilities has increased lab costs due to the need for barrier facilities, increased air handling, unique high-density ventilated racks, and the emergence of larger immuno-suppressed species and even aquatic species. This increasing requirement also puts pressure on replacing older facilities that lack the ability to support large vivariums.Universities, big pharma, and institutes are all competing within the S&T arena for research projects that often require specialized instrumentation, such as scanning electron microscopes, transmission electron microscopes, and nuclear magnetic resonance tools. These instruments require significant amount of space, system support, and vibration/magnetic isolation, thus driving up the cost of new lab construction.The drive for more equipment-based science, such as proteomics and nanotechnology, is having ancillary effects on the operational costs of labs through the use of more chemicals, chemical management systems, higher ceilings, larger fume hoods, and more overhead utility carriers, all of which drive up construction costs.
2005 New R&D Facility Construction Costs 20042005$/GSF$/GSFBiomedical facility$350–$385$375–$400Animal research facility$425–$475$450–$500Toxicology facility$400–$440$425–$450Chemistry research facility$400–$440$425–$450Biology research facility$350–$385$375–$400Analytical chemistry facility$300–$330$325–$350Software development lab$255–$280$275–$300Hardware development lab$300–$330$325–$350GMP production facilityClass 10,000$410–$510$425–$525Class 100$760–$860$800–$900BSL-3$375–$400$400–$425BSL-4$400–$425$425–$450Greenhouse$250–$300$275–$325
2005 Renovated R&D Facility Construction Costs 20042005$/GSF$/GSFBiomedical-1 facility$200–$230$250–$300Biomedical-2 facility$225–$260$275–$325Animal research facility$300–$350$325–$375Toxicology facility$275–$325$300–$350Chemistry research facility$250–$280$300–$350Biology research facility$180–$200$250–$300Analytical chemistry facility$160–$180$200–$225Software development lab$130–$160$175–$200Hardware development lab$160–$180$200–$225GMP production facilityClass 10,000$260–$310$300–$400Class 100$560–$660$650–$750BSL-3$225–$250$325–$350BSL-4$250–$300$350–$375Greenhouse$100–$200$150–$250
1 - While the study, "Year 2005 R&D Facility Construction Cost Index," is not designed to replace detailed cost estimates prepared during a project, it can be used as a benchmarking tool for different regions of the U.S. and major international cities.