“All I need is a lab bench and a cubicle.”
It’s a common request from start-up companies looking for initial lab space so they can begin moving scientific concepts forward. But in a marketplace that includes more than 18 million square feet of commercial laboratory space, finding just 500 or 1,000 square feet for a start-up lab can be a difficult task.
Lab space is costly to develop – up to $250 or more per square foot. Once built, lab developers and operators are hesitant to divide floor plans into small segments to accommodate small users. For this reason, lab incubators, created specifically to serve smaller users, are in great demand in Eastern Massachusetts.
A few years ago, Massachusetts Biotechnology Council (MassBio) developed a definition for laboratory incubators that included the following characteristics: multiple lab suites available in sizes from 250 square feet to 4,000 square feet, lease terms of six to 24 months, inclusion of basic tenant services such as lab waste removal, chemical storage, fume hoods, lab gases, pH neutralization, and access to common spaces and equipment. Today, six facilities in Massachusetts meet these criteria: Boston University’s BioSquare on Albany Street; the Biotech InnoVenture Center in Beverly; Cambridge BioLabs at One Kendall Square and the Science Hotel on Memorial Avenue in Cambridge; the Massachusetts Biomedical Initiatives (MBI) in Worcester; and UMass Boston’s Venture Development Center. Biogen Idec also runs an incubator, bi3, for start-up companies in which it takes an active financial interest. These lab incubators are well-run facilities with operators that know the needs of their lab tenants. These incubators are consistently at or near capacity.
So, with demand high, why are there not more incubators serving the need of researchers and start-ups? One reason is the type of demand. These users need the space to move research forward but are often at the very early stages of research and operating with limited funds and time (perhaps with research taking place only a couple of days a week). So, while they are looking for the attributes of a well-equipped lab with services, they also need it ideally at a lower-than market rate.
The challenge for the incubator operator is: How can you offer such space and services at below market rates for tenants who usually cannot commit to long-term leases? The answer has been mixed. Some Massachusetts incubators offer space at or above market rates, while others must depend on, essentially, a subsidy from a benefactor – a university, foundation or the public sector.
Worcester Incubator Success
The case can be made that the MBI in Worcester is the most successful lab incubator in the nation. Over the past decade, the MBI has graduated 59 companies from its four lab buildings. The five-year success rate of MBI’s graduates is 75 percent, compared with 56 percent of incubator graduates nationally.
Long-time MBI President and CEO Kevin O’Sullivan is the first to admit that the MBI wouldn’t be a sustainable model without an annual state contribution that accounts for about 15 percent of MBI’s operating budget.
When incubator space is not available, small users must search the difficult-to-find sub-lease or small space market. They may find a sufficient space, but without the shared services and equipment that comes with an incubator setting.
Help may soon be at hand. The Massachusetts Life Sciences Center (MLSC) has purview over the $1 billion Life Sciences Initiative, which includes funds designated for incubators and capital projects. A well-conceived incubator project proposal may soon receive MLSC support. Additional university- or developer-based incubator projects are rumored to be afoot, including one spearheaded by the Cambridge Innovation Center’s founder and CEO Tim Rowe (the CIC in Cambridge is a fantastically successful office incubator).
Our incubator shortage presents itself as a good problem to have. In other states and countries, publicly-funded lab incubators are underutilized, because of a lack of start-up generation. The start-up scene here is happily robust. The overall success of the industry here suggests that start-ups have been able to make a go of it despite the dearth of incubator space.
But, an easier road for lab start-ups, paved with ready-made incubator space, is clearly preferable.
Peter Abair is director of economic development and global affairs at the Massachusetts Biotechnology Council (MassBio).
