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Biotech and pharmaceutical companies are saving money by renting laboratory facilities instead of constructing expensive new research sites.
The high cost of building a laboratory presents a major financial challenge to small- and mid-sized companies. Renting space offers a low-cost alternative to constructing a laboratory. Lab buildings are much more expensive than office buildings of the same size. A report from the Oregon-based Portland Development Commission estimated the cost of constructing a new laboratory there to range from $250 to more than $1,000 per square foot, depending on the type of lab. A Class A office building in Portland costs $120 to $150 per square foot. (Actual costs vary around the country.)
Rather than spending large sums to purchase or build a lab, firms can rent facilities in large laboratories that have closed. Some have reopened as rental facilities. These spaces allow small- and mid-sized companies to rent first-class laboratory space at a savings, and may also include offices, small production plants, and warehouse space.
Recent mergers and acquisitions have resulted in the closure of laboratories employing 1,000 or more people. In the past two years, Pfizer 's research headquarters lab in New London, Connecticut and its lab in Research Triangle Park, North Carolina have closed. After its acquisition by Pfizer, Wyeth's Princeton, New Jersey laboratory also closed. But history indicates that some of these shuttered labs will reopen as multiuser facilities.
Closure of big labs is not a new trend. It has occurred periodically when waves of mergers and acquisitions swept various industries, or when poor economic conditions forced the closure of large labs. Results of previous mega-lab closures show how shuttered labs can evolve.
U-PARC
In 1985 Gulf Oil's corporate research center near Pittsburgh closed when Chevron bought the firm and consolidated research operations in California. The Pittsburgh research center has 53 buildings with a total of one million square feet of laboratory, office, manufacturing, and warehouse space on 85 acres of land. The facility was donated to the University of Pittsburgh, 12 miles away, the following year. The university renamed it the University of Pittsburgh Applied Research Center (U-PARC) and began seeking tenants. In three years employment at U-PARC increased from 250 to over 1,000 people as companies moved into...