Lab space that developers overbuilt for biotech after the pandemic is finding tenants again, and a growing share of them don’t run wet labs. AI hardware and semiconductor companies are taking buildings designed for life science users, according to reporting published Oct. 1 by Facilities Dive, and the retrofit they need is smaller than most owners feared.
The power gap is roughly 10 watts per square foot.
Why Surplus Lab Space Fits Advanced Tech Tenants
Mark DiNapoli, managing director of design and construction at Longfellow Design Build, told the publication that a life science fit-out typically carries 25 to 30 watts per square foot. Advanced technology users want 35 to 40. That’s a service upgrade and some distribution work. It isn’t a new building.
The rest of the shell already matches. Lab buildings were designed with high floor loads to control vibration for sensitive instruments, and hardware companies need the same capacity for a different reason: their equipment is heavy. Air change rates and clear heights line up too. DiNapoli’s summary was dry: “different reasons, same results.”
Compare that with the conversion everybody tried in 2021. Turning office into lab meant closing a far bigger power gap and adding structure the building never had. Plenty of those projects delivered into a market that had stopped leasing.
Where the Life Science Overbuild Stands
Newmark’s second-quarter life science report, which the article cites, found positive net absorption in Boston, the San Francisco Bay Area and San Diego, the three largest clusters. Newmark credits a rebound in capital markets, led by M&A and recovering venture funding. It also says tenants still hold the advantage and will keep concentrating in top-tier buildings in core locations.
Read that last part twice if you own a second-tier conversion.
DiNapoli put the overbuild’s start just before COVID, with the run-up lasting through 2022 and into 2023. The inventory is still out there. In San Francisco, he said, AI companies are absorbing lab product that was delivered and never occupied. Medical device makers are in the mix as well.
Build-to-Suit Lab Construction Is Coming Back, Selectively
Ground-up work hasn’t vanished. DiNapoli said large biopharma firms are asking about build-to-suit projects when existing inventory can’t meet a specific need, and he pointed to North Carolina’s Research Triangle, which didn’t overbuild as badly as the coastal markets and is seeing construction activity now.
The week’s news backs him up. Genentech broke ground Sept. 28 on a $750 million, 211,000-square-foot expansion of its Hillsboro, Oregon, manufacturing campus, with commercial operations planned for 2031, according to Construction Dive. The company didn’t name a general contractor. Its parent, Roche, has a second large manufacturing job in North Carolina: the Genentech Holly Springs facility.
So the work splits in two. Owner-users with balance sheets are building purpose-made manufacturing space. Speculative lab owners are selling watts and floor loads to whoever needs them.
What Contractors Should Price on a Lab Retrofit
For tenant-improvement and MEP contractors, the scope in these re-tenanting jobs is electrical first: service capacity and distribution to carry another 10 watts per square foot, with switchgear lead times that haven’t gotten friendlier. Mechanical changes follow the equipment. Structural work, the expensive part of any office conversion, mostly drops out.
Two cautions. Everything above about suitability comes from one executive at a firm whose business is building this product type, and Newmark’s absorption data covers a single quarter. And outside a few sectors the pipeline is thin: our coverage of the Dodge Momentum Index found commercial planning down 18.9% year over year once data centers are removed.
The number to watch is the one DiNapoli gave away: 35 to 40 watts per square foot. Buildings that can reach it will lease. The ones that can’t are still lab conversions waiting on a biotech tenant.