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5 Questions Your Growing Science Startup Should Ask Before Signing a Lease

Posted by Matt Segal on Feb 22, 2021 2:41:12 PM

5 Lease Questions - Original

Choosing the right research space for your growing startup is essential. Not only does it affect your day-to-day operations, but also your ability to grow your business, meet deadlines, use resources efficiently, and ultimately make more money.

With that in mind, it can be tempting to lease a space that has everything your future business could ever want. However, this can lead to paying for space or amenities you don’t need and will never use.

At the same time, you don’t want to lease a space that’s too small or restrictive to accommodate current or short-term research needs. Relocating a lab is a major undertaking, so naturally you don’t want to choose a space you’ll outgrow in less than a year or two.

Nobody makes the wrong decision on purpose, but there’s a lot to think about – especially if you’ve never done this before. We spoke with Corey Martin, founder and CEO of Spotlight Safety Inc., to find out which questions you need to ask before you sign on the dotted line. Here are five of the most important:

  1. Who “owns” the wastewater permit?
  2. What are the ventilation specifications?
  3. What is the control area breakdown?
  4. Is additional space available on the first floor for waste or flammable storage if needed?
  5. What are the expectations for lab decommissioning or decontamination upon move out?

Of course, there are more than five things you’ll need to consider before signing a lease for a laboratory or research facility. Corey and Matt took a deeper dive into twenty additional details during a recent video conversation.

Listen in and see what other questions made the list.

1.  Who “owns” the wastewater permit?

Wastewater permitting should be your first major consideration. There are two basic options: look for a space where the landlord already holds the essential permits or apply for your own. Each approach has its pros and cons, so being aware of these differences is the first step to selecting the right space.

As with any permit, the wastewater permitting process involves a lot of red tape. The requirements can be quite difficult to understand, and getting a permit can take anywhere from three to six months (or more).

If you’re within six months of your target move date, or money is less of a concern than time and energy, Corey recommends looking for a space where the landlord already holds the appropriate wastewater permit. Otherwise, you run the risk of your operational start date being delayed while you wait for the relevant groups to process your request.

The biggest downside to these move-in ready spaces is that they tend to be more expensive than one where you hold the permits yourself. As we said before, permitting is a lengthy process – so naturally you’ll pay more to rent a space where it’s already been done for you.

Despite the higher cost, choosing a space that’s already permitted can save you a lot of time and headaches. If you’re too busy to dig in and figure it out yourself (and you can afford it), this type of lab space is a great consideration.

One thing to keep in mind if you’re leasing a pre-permitted space is that you’ll still need to provide the landlord with the necessary information to update their existing permit. Your new landlord may need details about your chemical inventory or waste generation projections, for example, so be prepared to have these ready. If you bring in a new chemical hazard, your landlord may need to be updated periodically so they can add it to their permit for review.

Conversely, if you have more than six months to prepare for the move, you’ll have more flexibility in choosing a space where you need to obtain your own wastewater permit. Tenants who want to stretch their dollars and don’t mind putting in the extra legwork can potentially save money by going this route.

Of course, there’s plenty that can go awry. Since permitting requirements can come from the state, county, municipality, or town, permitting processes vary widely from one location to another. Time frames can be unpredictable, paperwork delays are common, and potential updates or retrofits to the existing wastewater system can be costly. Especially if this is your first time applying for a wastewater permit, it’s a good idea to seek out the advice of someone who’s already been there and knows the ropes.

2.  What are the ventilation specifications?

Proper ventilation is a critical engineering control in the laboratory environment and is a crucial element of ensuring the safety of your researchers and minimizing exposure to harmful chemicals. How much ventilation you’ll need will depend largely on what you’re planning to do in the space, particularly how many fume hoods you anticipate installing.

To make matters more complicated, there’s no universal standard for laboratory ventilation. ASHRAE, OSHA, and the NFPA each offer their own guidance on accepted minimum air change rates based on the hazards present. Additionally, Biosafety Level 2 (BSL-2) and higher labs have specific requirements for air changes, airflow, and recirculation. Unless you’re quite familiar with these standards, you may want to consult with an expert to make sure the space meets your requirements.

Looking for a location that was initially designed as lab space will help you avoid a number of difficult-to-uncover issues that may pop up down the line. Today, a growing number of office spaces are being converted into labs. This can mean that the landlord is inexperienced with lab design and management, introducing problems that could place an unexpected limit on your future lab operations.

Even if your landlord does grant you permission to add more fume hoods, these must be connected to the existing building HVAC system. If the existing air handlers and ductwork cannot support the additional fume hoods or “make-up air” requirements, you may be forced to move or pay for additional HVAC capacity, retrofitting, or remodeling. It’s enough to make any wallet shudder.

Don't want safety to get in the way of progress? Take a look at some other lab safety concerns for your growing science startup.

3. What is the control area breakdown?

Storage space matters, and that includes flammable materials. You’ll want to make sure whichever space you choose has enough storage space for flammable chemicals and waste. Though this may feel like a problem for tomorrow, it can be a serious limitation on future growth within the space, and one that may not be cheap or easy to overcome.

Building control area limits are based on building design and construction, vertical location in the building (which floor you’re on), fire protection systems (e.g., sprinkler systems), the quantity and type of chemicals you’re using, and how you store the materials (e.g., in rated storage cabinets). Notably, building control area limits get more restrictive as you go up in floors, so the higher you go, the less capacity you’ll be allotted for flammable materials (both stock chemicals and flammable hazardous waste storage).

If you know your operations will require large quantities of flammable chemicals or will produce a lot of flammable waste, it’s wise to look for space on a lower floor (typically on the first three floors). A medicinal chemistry lab that uses HPLCs every day, for example, will likely want to be on one of those premium bottom floor spaces.

Read more about how quickly the effects of flammable waste can stack up.

Because of the control area restrictions on higher floors, lower levels are often in greater demand by rapidly growing companies or those with chemistry-heavy operations. This can lead to more competition for lower level spaces, and thus may require more lead time when looking for space and/or promote somewhat higher rent costs. However, these additional considerations are well worth the flexibility and potential cost savings on the operations sides. For example, being able to order larger bulk purchases of flammable chemicals or scheduling less frequent waste pickups.

If, however, flammable storage is not much of a concern (looking at you, chemistry-light cell and tissue culture labs), you could find yourself with more available space options and thus more negotiating power. You may be able to consider space on a higher floor, and even get a great view out of the deal to boot.

You’ll also want to pay attention to how many tenants are on your floor. Each additional tenant will take away from that floor or control area’s total flammable storage allotment. While you might start out enough space initially, that can shrink if other tenants move in or if your operational requirements expand beyond your initial projections. Depending on your specific situation, you may want to speak to your legal team about making sure your allotment is protected in your lease contract. At the very least, knowing ahead of time that your available flammable waste storage may shrink can prevent painful downsizing in the future.

4. Is additional space available on the first floor for supplies, flammable storage, or waste if needed?

Labs are a lot like gasses – they expand to fill the space they occupy. Extra unused storage could instead hold additional stocks of disposables for those times when your supplier is a few weeks late with your conical tubes.

There’s also the issue of flammable waste. If you don’t have room to store flammable waste, or if you are restricted by the control area limits mentioned above, you may end up needing to pay for more frequent waste pickups – something that will quickly and painfully burn through your operations budget.

There can be significant cost saving opportunities associated with being able to collect and dispose of flammable waste in larger containers, however these opportunities can be limited by control area restrictions and waste area availability. Similarly, reducing the number of site visits by your hazardous waste contractor can promote cost savings by allowing you to lengthen the time between waste pickups to the maximum interval allowable by your hazardous waste generator status (though pickups at least annually are recommended even for VSQGs).

A growing number of landlords are aware of this issue and may offer small, rated waste storage spaces on the ground floor that have convenient access to the loading dock. This can be extremely useful and can promote further waste management savings by reducing the amount of time the waste contractor is required to be onsite for each pickup. Collectively these elements are worth considering if you are able to find a space that offers extra first floor storage at the right price. Even better if that space is near a loading dock to accommodate overflow waste and pickups.

5. What are the expectations for lab decommissioning or decontamination upon move out?

No matter how carefully you choose your space, eventually the day will come that you’ll need to move out. Things change, and the spacious lab you once rented may be too small to accommodate your new hires as you scale. Or, you might have enough office and bench space, but run into flammable limits or waste storage issues that prevent you from expanding your lab operations. On a less pleasant note, funding may have dried up and it’s time to downsize into a space that’s more affordable.

In any case, moving out can be an expensive and time-consuming process, so you should be sure to go over the expectations for the move out process before you commit to a lease.

If your lease requires “decommissioning”, it refers to the process of formally decontaminating surfaces, removing all hazardous materials, and making the space safe for future use. It also means that you will be responsible for sampling for hazardous chemicals and biologics, which is often associated with a formal report certified by a Certified Industrial Hygienist (CIH). These factors can greatly increase the time and cost requirements associated with move out.

This might not seem like a big deal until you get hit with the bill. Corey reports that a full, formal lab decommissioning can take around two to three months and cost several thousand dollars more than a more informal lab decontamination or surrender plan requirement that doesn’t require formal sampling or CIH certification. This doesn’t have to be a deal-breaker, but it is something that you’ll want to consider before signing the lease. And as you’ll see, it’s not all downside.

The flip side is that if you aren’t required to conduct a formal decommissioning, it’s likely that the previous tenant didn't need to either. This may mean that when you move in, you’re inheriting a greater risk of contamination or hard to see liabilities that a formal lab decommissioning is intended to avoid (and that you might have to pay for later).

The last thing you want as a growing company is to assume the responsibility of mistakes made by previous tenants (e.g., mercury in the sink traps). It can be difficult to prove ownership of these mistakes without prior sampling data, and believe us when we say you don’t want to be stuck with the bill of handling the cleanup. It’s an important consideration for an option that may otherwise appear to be all upside.

Final thoughts

Choosing a space for your startup is a big decision, and you don’t want to leave anything to chance. It’s worth taking the extra time up front to make sure you know what you’re getting into and the key pieces of information you need to be aware of. Don’t be afraid to ask a lot of questions and really think ahead about your future needs before you settle on a space.

The questions in this article will give you a good starting point. However, there’s a lot more to think about. Be sure to check out this video conversation between Corey and Matt for 20 additional questions and points you should consider.