Local Sustainability Pushes Leave Energy-Hungry Lab Buildings Seeking Efficiency

The explosion in lab construction — with 21M SF of speculative development in the works nationwide, per CBRE — has come just as municipalities across the country, seeking to slash carbon emissions, have considered or passed bills limiting energy usage in large commercial structures.

Two of the most watched examples, Boston’s Building Emissions Reduction and Disclosure Ordinance and New York City’s Local Law 97, would by 2030 and 2024, respectively, require large commercial buildings to start showing significant emission cuts or face fines. 

As the deadlines creep closer, lab developers in those cities are deploying new technologies and strategies at their projects, moves that could presage a sea change toward a more sustainable life sciences industry. 

At the Hudson Research Center, a 100K SF lab building in New York City's Hell’s Kitchen neighborhood owned by Taconic Partners and Silverstein Properties, an air source heat pump the size of two food trucks was installed in November. The largest in the city, Taconic says, the device will replace gas-powered heaters with a purely electric heating solution.

More sustainable heating infrastructure represents an investment in the future as building electrification and energy efficiency become regulatory requirements, Taconic Executive Vice President of Commercial Asset Management Matthew Weir said.  

“If a tenant is looking at another opportunity, especially one that features older infrastructure versus ours, it’ll give us an advantage,” Weir said. “It’s an advantage in leasing, and we’re seeing that in real time.”

Due to constant air exchanges, precise temperature settings, freezers and numerous specialized machines, labs use significantly more energy than standard commercial or even many industrial buildings, roughly two to three times more than typical office space, according to Anthony Montalto, a partner and engineer at Jaros, Baum & Bolles, which did the engineering work at Hudson Research Center. 

Without exceptions for lab space — which some in the life sciences industry have lobbied for, Weir said — meeting local emissions benchmarks could be challenging for life sciences landlords, especially those who own biomanufacturing sites and highly secure biohazard sites, which require extensive energy and air exchange rates.

As written, the sustainability pushes might impact the highly sought-after biotech industry; New York City, a leader in implementing these regulations, has sunk $1B into programs to attract and build new lab space.

“Obviously these life science labs are doing important work for the public good, especially those working on vaccine research and therapeutics,” said Association of University Research Parks CEO Brian Darmody, who believes cities should be careful not to chase away sought-after lab buildings and jobs with overly strict regulations.

“Jurisdictions will want to make certain their green energy policies aren't inadvertently restraining important research or driving researchers away from bio clusters where critical work is being done collectively,” Darmody said.

But in anticipation of these regulations taking effect, developers and engineers told Bisnow they are already figuring out ways to increase energy efficiency and meet these new requirements. 

“For years, we have seen third-party green building rating systems help drive the industry and influence local, state and federal laws in some capacity,” IQHQ Director of Sustainability and Environmental, Social and Governance Jenny Whitson said.

IQHQ is “aggressively working towards carbon neutrality for all their development projects” and plans to set target goals for emissions reductions in 2022, Whitson said.

Alexandria Real Estate Equities President and Chief Financial Officer Dean Shigenaga said “sustainability has become extremely important” to securing high-profile tenants, such as Moderna's new HQ at 325 Binney St. in Cambridge, underscoring its investment in cutting energy usage.

Hudson Research Center marked the first time Taconic had designed with Local Law 97 in mind, Weir said, but it won’t be the last. 

“Local Law 97 doesn’t distinguish between labs and other spaces,” Weir said. “Our firms are focused on it, and we really wanted to push the envelope, both generally and as it refers to life sciences. [We're] excited that we’re an early mover.”

To achieve these cuts, building developers and owners have a few different pathways. Most of these center on electrification and finding creative ways to recycle and recover the energy used in the building.

Consider the plumes of steam that come from cooling towers — visualizations of energy wasted. At Hudson Research Center, the heat generated by the equipment in the interior labs is being used to heat the rest of the building.

Montalto said most of the life sciences industry has embraced Local Law 97 — it’s a stick that is forcing building owners to recycle energy and move toward electrification. Real estate industry groups, such as the Real Estate Board of New York, have been critical of what they consider overly strict regulation.

“A lot of projects from the last few decades haven’t done enough to recycle the energy that leaves the building,” Montalto said. “Many developers are doing it, but many aren’t because, let’s face it: Gas is cheap, approximately sixth the cost of electricity.” 

Montalto said most of the lab projects he is working on are retrofits for 20-to-50-year-old buildings, turning former office space into labs, a challenge due to old façades that leak lots of air. Older buildings present a significant challenge. A recent analysis by the Boston Business Journal found that labs in the city produced triple the emissions per SF overall and face significant costly upgrades. 

IQHQ said it sets tenant sustainable design and construction guidelines that address items such as maximum lighting power levels, plumbing fixture water consumption, healthy materials, recycling requirements and submetering to achieve energy reductions. Tenants typically sign triple-net lease structures and pay for utilities, so it is of value to everyone to cut down energy use by the end user. 

Weir said adding the large new heat pump at Hudson Research Center will help tenants and their bottom line, especially when it comes to the cost of meeting Local Law 97’s requirements. Taconic is writing leases with Local Law 97 in mind, passing down the costs of compliance to the tenants, a practice Weir expects to become industry standard. 

Many in the industry who have already invested in sustainability measures see it as more than simply complying with shifting regulatory requirements or doing right by the environment.

Shigenaga said it is roughly 5% more expensive to build a new lab sustainably, a fair price for features that help attract top tenants who have to contend with their own internal environmental metrics or meet the demands of sustainability-minded investors; 70% of Alexandria's top 20 tenants have “set a high bar for their sustainability requirements,” he said. 

But it is unclear, with the immense demand for space, if all tenants have the ability to wait for the more sustainable lab option to come onto the market when they are looking to lease. 

Many feel more regulations like BERDO and Local Law 97 are eventually coming everywhere. Cambridge, which has significantly more lab space than Boston, doesn’t have an emissions reductions law in place, but Shigenaga feels it is inevitable. And with the extensive demand for space creating longer wait times for tenants, the long planning process for new lab space and the higher price point for these buildings, developers can’t wait to factor in or think about sustainability and emissions requirements.

“It’s fluid, at least to my understanding, which means why it’s tough to calculate what the regulations will be today,” Weir said. “But you need to plan for the most conservative approach, and that’s what we’ve done. That will give you an advantage.”

CORRECTION, JAN. 21, 11 A.M. ET: A previous version of this story misstated Matthew Weir's title. It is executive vice president, not vice president.