Understanding Lease Language
Typical Lab Spaces
and Some Cautions
Laboratory leases can vary depending on the type of lab space, lease structure, and specific needs of the tenant. Venture Forward specializes in helping clients find the right spaces for their labs and ensure the long-term lease agreement is favorable to your company.
Each of the typical space types below has pros and cons that are entirely dependent on the needs of the individual tenant. Spaces and leases are not a one-size-fits-all situation. The earlier we can help the easier it is to ensure you land in the right space. Before deciding on a space type, let us perform a needs assessment and review your equipment matrix with you, to ensure that the spaces you tour fit your particular needs and equipment. We can provide you with a full assessment to arm you with the information you need when walking through different spaces on the market.
The main types of laboratory spaces are:
- Turn Key
- Client Built to Suit
- Spec Suite
- Incubator
- Sublease
Below is a brief synopsis for each space type along with some cautionary notes before signing that lease agreement. Let us dive into more detail with you and your team to ensure you are touring spaces that fit your needs and negotiate a lease that allows your company to continue to grow.
Turn Key
The landlord provides a fully built-out lab space. This setup involves the landlord overseeing the construction process, with any construction costs exceeding the tenant’s allowance to be paid by the tenant. Lease agreements are typically long-term (over 5 years), and spaces are usually larger than 15k square feet. This type of lease may include some lab equipment and furniture, and can reduce the risk of a large capital project.
Client Built to Suit
A Client Built to Suit approach requires the client to own the construction process, with a tenant allowance provided by the landlord. Any cost that exceeds the tenant allowance is paid by the tenant. Lease agreements are typically long-term (over 5 years), and spaces are usually larger than 15k square feet. This allows for more control of the design and finishes, tailoring the space to your exact needs, but increases the liability of upfront capital.
Spec Suite / Minor Mods
A Spec Suite or Minor Mods approach offers different levels of fully built-out office and lab spaces, with the option for minor modifications at the tenant’s cost or with some additional allowance by the landlord. Lease agreements are typically shorter (2-4 years), and spaces can be smaller than 15k square feet. This process allows for shorter construction timelines and reduces upfront capital, but it may not be tailored to every aspect of your lab. Clients are also typically responsible for facility maintenance in the office and lab.
Incubator
An Incubator setup offers fully built-out space, sometimes including equipment, with the option for minor modifications at the tenant’s cost. Lease agreements are usually shorter (1-3 years) and flexible, with spaces usually smaller than 10k square feet. Shared amenities are of a higher standard, though service levels between incubators can vary. Costs are relatively low for construction, but rent can be higher depending on the location and services provided by the Incubator.
Sublease
A Sublease arrangement involves occupying a smaller space within a current tenant’s (sublessor) premises, often with shared areas and some isolated rooms in the lab. Typically, they include a similar infrastructure to spec suites with casework, and some lab equipment already in place. Depending on their growth plan, the subtenant usually gets a shorter lease term than the sublessor.
Shared amenities are typical within the space, and negotiations for vendors and services are with the sublessor. Minor modifications can be discussed with the sublessor, but subleases are subject to primary lease conditions. The operational and facility setup can vary depending on the sublease situation and the sublessor’s policies.
Lease Review Cautions
Since leases can range anywhere from 2-10 years in duration, it’s important to do your due diligence before signing to make sure that the space works not just in the short term but in the long term as well. Negotiations can move quickly depending on availability in the market, but changing those terms after the lease is signed is easier said than done.
At Venture Forward, we have a proven process to help guide you in making the best negotiations with your broker. This can avoid miscommunications and potential issues that could affect your growth potential and/or the perceived value of the space. There are many factors in a lease agreement that impact everything from the design process to operating expenses, even signage restrictions. Our process pulls out key areas that others may overlook or not understand their full implications downstream.
We want to help you understand what “Substantial Completion” means and how that may affect your move-in date, or coincide with your Rent Commencement date. We also help you understand the details of landlord allowances and where to negotiate terms, including building services, MAQ levels and emergency power/generator capacity to ensure they are sufficient for your lab’s needs. Your landlord/tenant matrix is a critical exhibit that will be leveraged throughout the duration of your lease agreement.
Call us today before you sign that lease and let us help you understand exactly what you are getting.
Venture Forward Partners is a full-service Laboratory Planning, Project Management and Lab Services company for life science and biotech laboratories in Greater Boston. From site selection and lab relocations to setting up and maintaining your lab, we provide a broad range of services and solutions to support your lab operations. Our team possesses unparalleled energy and enthusiasm towards the work we do and we have the expertise, training, hands-on lab experience and industry connections to ensure your lab’s success. Whatever your lab needs – we make it happen.