The Price Is Right: Pre-Construction Expert To Speak At Bisnow’s San Francisco Peninsula Life Sciences Event

For Rossi Builders, establishing a clear process for analyzing and reducing project costs has been a key step in helping the company meet the demand for lab spaces in the Bay Area.

Rossi has been in business for 89 years, which includes 25 years of experience in the life sciences sector. Rossi Builders' director of preconstruction, Sherif Eldash, works with both the facility directors and Rossi’s experienced subcontractor pool to develop a realistic budget that meets end users’ scientific needs. A major part of this process revolves around the company’s approach to pre-construction.

Eldash will represent Rossi Builders at Bisnow’s event The San Francisco Peninsula CRE Market Update on Nov. 28. The event will focus on exploring opportunities for CRE development across all of the industry’s sectors, including life sciences. The Peninsula Life Sciences Landscape panel, on which Eldash will speak, will cover life sciences trends in the Peninsula and how to bring more lab spaces to the region. Click here to register.

In a conversation with Bisnow, Eldash discussed funding challenges for landlords and life sciences companies amid the high-interest-rate environment, Rossi Builders’ contribution to life sciences, and the intricacies of cost estimating and value engineering for life sciences projects. 

Bisnow: What are some of the challenges of building labs in a period of economic uncertainty?

Eldash: For smaller life sciences companies, the challenge has been in obtaining funding, which has been impacted by the higher interest rates and venture capitalists holding money close to their vests. However, for larger life sciences companies, the rising interest rates may not affect them due to their capability to self-fund and having significant cash on hand, resulting in not needing to borrow.

Inflation has also been impacting the cost of materials, equipment and labor. As prices go up, it becomes harder for some clients to justify their construction spending and budget allocations compared to only a few years ago, when inflation was close to the Federal Reserve Board’s target of 2%.

Additionally, another challenge is lead times for many lab-specific equipment and furniture, which can extend to over half a year.

Bisnow: Despite rising interest rates, how has Rossi Builders worked to meet the demand for labs?

Eldash: Currently, over half of our business is in the life sciences arena, with the remaining balance split among other technologies, office and medical. We’ve been able to meet the demand by utilizing the strong relationships that we have nurtured for decades with our subcontractors, who specialize in lab build-outs. Through this partnership, we ensure to provide the adequate manpower and expertise to assist in design and deliver the schedule and budget.

Bisnow: Your work at Rossi Builders includes cost estimating as well as value engineering as part of the pre-construction process for lab projects. Can you explain more about how these aspects work and what considerations need to be made?

Eldash: Every construction deal has its economics. When a life sciences client is thinking of a potential project, it must make sense financially for them to proceed.

Typically, we’re involved at the beginning, so they may not have all of the information on their end about what materials they need and considerations they have for their lab. However, we need to ask a lot of questions for them to answer so that we can get them a realistic budget. During pre-construction, we make sure that we ask pertinent questions that tend to be the main cost drivers. For example, we ask about their equipment list, HVAC air change requirements for their scientific needs, and any power and emergency power requirements. In some cases, where answers are not available, we make assumptions based on our experience and qualify those to the client as we present our budget.

All of this is done with our subcontractor team. This is critical in terms of getting initial feedback regarding the construction feasibility.

Value engineering comes into play to cut down on costs based on the clients’ budgeting restrictions. The VE list is established after receiving the end users’ feedback on what they must have, should have and like to have.

Bisnow: What is your prediction for the future of lab construction in the San Francisco Peninsula?

Eldash: I think it is mixed. There is a lot of political pressure for the government to mandate medicine pricing. I have concerns about the unintended consequences of government regulation in this industry's pricing structure because it will hit profits of life sciences companies. If profits go down, there will be fewer resources available for future research and development, which is what fuels new scientific discoveries.

But on the positive side, I know the brightest minds in the world work and live in our region to innovate and improve the quality and length of our lives. All of these brilliant people will continue to figure out ways to make a difference.

Bisnow: What are you looking forward to most about speaking at the event and on the Peninsula Life Sciences Landscape panel?

Eldash: I’m looking forward to meeting other life sciences professionals, learning from my peers and hearing more about what trends they’re seeing in the industry.

This article was produced in collaboration between Studio B and Rossi Builders. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.