Today we’ll look at office to lab conversions. The idea of turning office space into lab space has been tossed around in the media for years. Most people would think this is the easiest conversion, but there are some challenges that come with this type of conversion. Let’s take a quick look at why people are talking about this and what the challenges are:
– There will always be a need for labs – as long as we are trying to improve the quality of life for humans – there will be labs.
– Lab employees are in the office daily, they need to be there!
– Lab rental rates are much higher than office.
– The average office ceiling height is too short for a lab.
– The building needs to be sturdier than the typical office due to machinery and other equipment needed in the lab space.
– The power requirements are much greater – meaning the cost could be high.
– Some labs use chemicals and gases that are not compatible with office space.
If you are interested in more, here are a few more articles on this topic:
— Lab Enabled Office Space
— Converting an Office Space into a Lab
— 8 tips for converting office space to life sciences labs
Here are my final thoughts:
1. Labs will never be remote: Half of Americans are now working partially or fully from home, resulting in a decrease in office space occupancy. Labs offer a solution because they cannot be done remotely. If you can make the space work, this is a viable use.
2. Growing Life Science Sector: The life sciences sector has been growing since COVID. With the continuation of its growth, labs have gone up 50% in just 5 years, taking up 181.7 million square feet as of Q4 2022. By 2025, it is forecasted to take up 220 million square feet! Record Growth in U.S. life sciences real estate footprint
3. My Biggest Concern: A lot of adjustments will need to be made: This type of conversion requires a great deal of work. Most likely, the building will need to adjust ceiling heights (potentially removing a whole floor), sturdier floors/walls for machinery and equipment, and more power which can be expensive. Another good thing to be aware of is the need for service elevators for bigger deliveries. Here is an article that goes into more detail: Bridging the Gap Between Office and Labs
The Life Sciences Sector is booming! If we can find office buildings that fit lab requirements, we will begin to see more of this conversion. However, due to the challenges herein, I don’t think this will be a big trend.
The future of the office is a labWhat’s going to happen to the office space we no longer need?
By Rani Molla@ranimolla Updated Oct 24, 2022, 6:58am ED
Rani Molla is a senior correspondent at Vox and has been focusing her reporting on the future of work. She has covered business and technology for more than a decade — often in charts — including at Bloomberg and the Wall Street Journal.
If the future of work is online, the future of the office is something else. While people are considering a wide variety of new lives for office spaces — distribution centers, schools, data centers, hospitals, and, most prominently, apartments — labs might be the most promising reincarnation for struggling offices, thanks to tectonic shifts in the market since the start of the pandemic.
Anyone who’s seen a church become a retail store or a mall transform into an apartment block can attest that the built environment, though constant, is never stagnant. The number of office buildings that are being converted into something else in major markets like Boston, San Francisco, Raleigh/Durham, Denver, and New York is slated to grow 50 percent this year, according to data commercial real estate services firm CBRE shared with Recode. While these buildings still represent just a small share of office stock in the US, what happens with them could help guide what happens to unwanted office space for years to come.
Currently, nearly half of Americans are doing at least some work from home. Thirty percent are working hybrid, meaning they work both at home and in the office, while another 15 percent are fully remote. And experts say these rates should hold once the pandemic is over. September was supposed to be the month people returned to the office, but office occupancy rates are still at less than 50 percent, according to Kastle, which makes keycard systems for workers to swipe in and out of the office. As a result, offices are experiencing their highest vacancy rates in three decades: nearly 17 percent, CBRE data shows. When people’s offices are their living rooms, there’s simply less need for commercial office space. Extrapolating from New York City data, one recent study estimates that the value of offices around the country could decline about 40 percent, or $453 billion, as remote work lowers the demand for office space. Just how much office space will go unused is so far unclear, but if that dollar figure is any indication, there could be a lot of empty offices.
“AS LONG AS THERE’S CAPITAL TO SPEND ON IMPROVING THE HUMAN CONDITION, THERE WILL BE A PLACE FOR LABS”
Meanwhile, major cities where these offices are located are otherwise flourishing. People are flocking to live there, to hang out there, and even to work there — but not exactly to go to their old offices. That leaves a big open question as to what to do with office buildings that are idling amid what’s otherwise some of the most in-demand real estate in the country. In dense cities, it’s often easier and faster to turn one type of real estate into another, rather than build it from scratch.
What exactly these conversions will look like depends on the area, the structure of the building, and the needs of tenants. The most obvious conversion would be to affordable housing, since there’s a national shortage. The problem is, apartment conversions aren’t always possible given the sheer size of some office buildings. Even if developers overcome all the issues with zoning and adding separate bathrooms and kitchens in every apartment, they still run up against the niggling realization that people need windows in their apartments, and that can be impossible to achieve in large buildings. Importantly, apartments rent for way less, making the move less financially attractive to building owners.
For the empty offices that can’t become housing, labs are increasingly their second life.
In many ways, it makes sense. Offices and labs both command high rents, and they’re both places people go to work (labs just have a lot more cool stuff inside, like centrifuges and safety showers). A significant amount of the vacant office space is also located in cities where, thanks to their proximity to universities and their ample talent pools, demand for lab space is on the rise.
“They prefer to be able to do an easy commute from their apartment building a couple blocks away, as opposed to jump in a car and drive,” Scott Davis, vice president and director of the mechanical department at consulting engineering firm Bala, said about young scientists.
Labs also don’t run the risk of becoming unnecessary under remote work, making them a much more certain bet.
“It would be very difficult to do lab work not in a dedicated lab building,” said Mike Lee, life science lead for workplace strategy and human experience at real estate firm Newmark. “As long as there’s capital to spend on improving the human condition, there will be a place for labs.”
And the need for lab work isn’t going anywhere.
Even before the pandemic, the life sciences sector was growing briskly, thanks to increased spending on new drugs meant to help an aging population deal with age-old problems. But private and public investment in biotech surged even more during the pandemic, as the world brought its resources to bear against Covid-19. In turn, employment in life sciences has marched in lockstep with investment and vastly outpaced overall employment. In the past decade, life science employment grew nearly 7 percent a year on average, compared with 1 percent across industries, according to a Cushman & Wakefield analysis of BLS data.
Office owners and developers were converting office buildings into labs before the pandemic, but interest in the idea has taken off since. And conversions that were planned during the pandemic are now opening their doors, showing would-be developers that it’s possible. From the former Boston Globe newspaper office to a vacant WeWork in Durham to the one-time headquarters of Old Navy in San Francisco, offices across the country are becoming labs.
Commercial real estate services firm Newmark is tracking nearly 17 million square feet in lab conversions and another 25 million of new lab space under construction in top US life science markets. That’s roughly equivalent to more than 20 football stadiums and would make up about a quarter of all the lab space already out there.
“Every project is being considered for a life science conversion,” said Daniel Hackett, managing director of life science and medical technologies at Cushman & Wakefield. That’s not to say that all vacant office space should be converted to life science, or that it’s always possible.
Engineers have to figure out how to fit tons of heavy equipment in office buildings that aren’t as strong or whose stories aren’t as tall as in traditional labs. They need elevators that can haul much more than people, printers, and reams of paper (and preferably, elevators where lab rats aren’t sharing space with people carrying their lunches). The converted lab spaces also need much more robust power, plumbing, and air filtration systems than a conventional office, which typically just needs to keep computers running.
But where there’s demand, there’s a way. Engineers are coming up with ingenious work-arounds that make more office spaces life science contenders.
How to make an office a lab
Let’s say you’re in the commercial real estate business and have an increasing amount of vacant square footage in an office building. Or maybe you’re the chief operating officer for a life sciences company with a growing number of employees who need more space. Converting office to lab space is probably on your radar.
A lab, at its basic level, is a heavily controlled environment in which scientists can research, experiment, and explore. It sounds simple, but a lot goes into making that happen.
One of the biggest issues when converting offices to lab space is that the height of each floor — usually about 12 feet — often isn’t enough to accommodate the various needs of a lab space, which requires about 15 feet between floors. (Developers think in terms of floor height, rather than ceiling height, because it represents all the possible space in which they can cram stuff.) First, lab spaces need to fit huge pieces of equipment like biosafety cabinets and fume hoods. These spaces also need to fit a lot more mechanical, electrical, and plumbing than an office. Labs, for example, need to recirculate air at least five times more frequently than an office, and that air needs to be filtered, tempered, and dehumidified. They also need to deal with stuff like chemical waste.
Typically, all that infrastructure would run through the ceiling or floors, but in shorter office floors that’s not always feasible.
Another big consideration is the stability of a building. While offices were built to handle movement from people working within them, lab spaces have to be much more stable to keep machinery from shaking the building or to keep the movements of the building from affecting lab equipment like electron microscopes. That’s not as much of a problem with older, sturdier buildings. But many newer office buildings that were created only with office use in mind need to install steel reinforcements.
Naturally, developers look for buildings that require the least amount of change, for the sake of time and money. Brandywine Realty Trust chose the location of its life science incubator, B.Labs, based on its proximity to transit, universities, and where new life science grads live. The design and development firm also picked it because it wouldn’t take as much overhaul as some other office buildings. Engineers found that the structure could already support the weight and vibration needs of a life science space.
Located in three floors of former office space in a Philadelphia skyscraper, the “plug and play” lab and research space was already fully leased when it opened in January. Unlike the rest of the building, which is rented predominantly by typical office tenants like investment and law firms, the lab houses life science companies specializing in things like gene and cell therapy. It’s also now home to equipment like liquid nitrogen freezers, tissue culture rooms, and steam sterilizers.
But even in what the developers considered an ideal spot, floor heights were still an issue.
The building’s 13.5-foot floors, while tall for an office, were a bit of a challenge for a life science space. Engineers leaned on the industrial-looking open ceiling concept and careful positioning to eke out precious inches that would have otherwise gone into building a ceiling.
A floor at B.Labs before conversion. Courtesy of Jeffrey Totaro
A floor at B.Labs after conversion. Courtesy of Jeffrey Totaro
Developers in other buildings have had to resort to more drastic solutions. Engineers at Bala are routing pipes, electric, and ductwork in adjacent corridors or rooms rather than in the ceiling above. In some cases, they even utilized parts of the floor above to accommodate it (of course, then, you can’t use those parts of the next floor for lab space).
Floor heights and stability were less of an issue with 95 Greene Street, a Jersey City building recently converted from an office into move-in-ready lab space. That’s because the eight-floor building, constructed at the start of the 20th century, had an even earlier life as a manufacturing facility for toothpaste. Still, Thor Equities, which bought the building in early 2020, had to perform a number of upgrades to the building’s mechanical systems, including the installation of a new ventilation system. They also had to play a bit of Tetris to fit all the necessary mechanical, electric, plumbing, and fire protection equipment on the roof. Current tenants include an urgent care center and a company that specializes in lab-produced meat products.
Another major improvement that offices frequently need in order to become viable lab space is the addition of freight or service elevators. Life sciences companies get an immense number of shipments, many of which — perhaps it’s animals for a vivarium or dangerous gases like liquid nitrogen — aren’t suitable to ride alongside the rest of us.
Newmark’s Lee typically advocates for office-to-lab conversions to add a service elevator if there isn’t one.
AS IS THE CASE WITH ALL REAL ESTATE, IT’S POSSIBLE TO BUILD TOO MUCH
“It’s just better for biocontainment issues,” he said. “If you have someone coming up with some lunch, you don’t want that person to be next to someone who’s bringing something up that’s gonna go directly into the lab.”
Other improvements are a matter of planning and operations. Lee suggests placing labs on interior walls to avoid as much temperature variation as can happen at the exterior. Varying temperatures could affect the substances used in labs or affect the outcomes of research. Placing typical offices on exterior walls creates a “sweater,” or a barrier, for labs that are then placed in more interior locations.
All of these conversions can be very expensive — hence buildings that require less work are more appealing. Many developers are willing to stomach those costs, however, in return for the higher rents that lab spaces command. Lab space rented for a record $58 per square foot in the second quarter of 2022, compared with $37 for office space, according to Cushman & Wakefield.
But as is the case with all real estate, it’s possible to build too much. That hasn’t happened yet, but it’s something developers should be wary of. In the first half of 2022, life science venture capital funding dropped 18.5 percent, and investment in life science real estate dropped as well, according to a midyear report by Newmark. Still, even as more and more lab space opens up and investment has slowed, people’s thirst for lab space is still high. Vacancy rates at labs have remained incredibly low, while rents and demand for lab space in major markets have remained elevated. While the need for growth in the life science space won’t always be as robust, it’s not going away.
The continued growth of lab space across the country, either converted from other real estate or newly built, will have profound impacts not just on the buildings where we live and work, but also on our future. Labs are where scientific discoveries are made and where the future of medicine is built. Out of old offices comes something new.