Labs Are Getting Smaller, Smarter And Forcing Landlords To Pivot Quickly

Downsizing, automation and outsourcing are usually assumed to have the most drastic effects on lower-wage and lower-skilled workers. But these forces have impacted the most high-tech life sciences labs in the nation, and many in the industry already see how biotech and lab space development and operations are shifting as a result. 

“Outsourcing, robotization, miniaturization, all the same trends are impacting every business, even ours,” said Lab Launch CEO Llewellyn Cox, a former scientist whose firm has developed a pair of incubation and postgraduate lab spaces in Los Angeles. “Companies are looking for smaller spaces. Even five to 10 years ago, labs were less about people stirring beakers and mixing solutions than most people envision.” 

A confluence of factors is impacting the way startups, especially those operating in incubator spaces or postgraduate lab space, are thinking about their real estate needs. Lab automation, machine miniaturization and advancement, and the advent of more robotics in workspaces all means existing lab space can be more efficient.

Outsourcing, whether it comes from companies doing basic research or manufacturing, is another increasingly popular way startups are shrinking their footprint. And even though venture capital investment in the field is hitting record levels, especially early Series A investments, startups would rather invest in talent and testing than additional square footage. 

“Founders are truly serial entrepreneurs at heart,” said architect Matt Malone, Perkins & Will's science and technology principal. “If they can keep their overhead to a minimum and sell their idea, they can more easily move to the next idea.” 

Malone said he’s seen startups in New York City, where he operates and has helped design facilities like InnoLabs, that are moving out of incubators cutting their space demands significantly, asking for 7K to 15K SF instead of 10K to 20K SF. At the same time, he’s seeing more startups look at contract research and manufacturing options, called CROs and CDMOs, to outsource basic lab work. Those companies are increasing their pace of new lab construction to meet the demand.

Part of the shift in space requirements is due to the changing, more digital nature of research and development. In LA, Cox said he’s seeing 10K SF lab spaces becoming heavier on office, collaboration and computational space, as opposed to more wet labs. A suite that was half lab and half office just a few years ago might be 40% lab today. That shift saves startups significant money, cuts development costs, and allows for a greater density of companies within a development. 

“We’re all tied to our computer screens now, like all professions,” Cox said.

It’s changing how Cox’s company, Launch Lab, is developing its new space in LA’s Atwater Village. The new facility consists of private micro-suites measuring 500 SF to 3,500 SF, meant to fit small teams and fill a niche for growing companies of just four or five members looking to expand but hold down fixed costs.  

Cox said these shifts in spatial needs and operations are also spawning new business models. Illumina, a company that makes advanced gene sequencing tools, has created its own accelerator program, recruiting startups that have a need for sequencing and can benefit from being in a space outfitted with the firm’s latest machines.

Cox also spoke of the foundry model, where startups and device manufacturers work together and co-develop technology, sharing intellectual property and potential proceeds in the process. 

Other new developments are experimenting with ways to provide additional services to small startups with smaller leases. In King of Prussia, Pennsylvania, the $1.1B, 680K SF Center for Breakthrough Medicines is combining lab suites and a CDMO, siting viral vector manufacturing suites, cell therapy suites and plasmid manufacturing next to a bank of incubator spaces so researchers are closer to where their therapeutics are being made. 

Center for Breakthrough Medicines co-founder and Chief Business Officer Audrey Greenberg said the facility fills an important niche, especially for the growing cell and gene therapy field, where 42% of companies do outsourcing at some level, per a Deloitte study. With so much outsourcing, they’re almost like virtual companies, requiring just a handful of staff and a small space in which to operate.    

These changes in the way smaller startups in the field operate — a more lightweight model requiring minimal staff and space until meeting a regulatory or fundraising goal sets off a rapid expansion — are challenging developers to be better operators.

Greenberg said firms are seeking a “continuum of spaces that serve their needs.” That could include collaborative environments, shared resources and the ability to expand suddenly within the same facility, campus or property company. 

“If I’m a startup, I’m looking for an organization that can do operations, that understands how to manage amenities and support shared facilities,” Malone said. 

That all-in-one strategy has been promoted by top landlords in the space, including Alexandria Real Estate Equities and BioMed Realty Trust. BioMed President of East Coast and UK Markets Bill Kane said he puts extensive focus on internal growth and repositioning tenants. The firm, which has 14M SF under management, invests more in that repositioning than its new projects, he said. 

“Tenants are moving faster, changing technology faster and want changes faster,” he said.