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The costs of new laboratory space has been rising significantly, convincing state officials to invest more in approved projects in Delaware. | DBT PHOTO BY JACOB OWENS[/caption]
BEAR — One month after state officials decided to raise the maximum grant amount for lab space, three familiar companies received approval for additional funds as construction costs continue to soar due to inflation.
Prelude Therapeutics, Analytical Biological Services (ABS) and Advanced Materials Technologies (AMT) were approved this week for a combined $1.6 million in increased taxpayer-backed grants to build new lab space. All three were previously approved funds by the Council of Development Finance (CDF), but returned to receive adjustments under the graduate lab space grant program.
In May, the CDF agreed to raise the cap of the lab space grant program from $50 per square foot to $70 per square foot temporarily until June 2023. Companies that receive grants agree to remain in the space for five years while a landlord agrees to keep the lab space intact for at least six months should the applicant leave within that period.
“These costs are increasing due to supply chain issues that most industries across the nation face at this point, but especially the heightened demand in lab construction,” said Noah Olson, director of innovation at Delaware Prosperity Partnership, the state’s public-private economic development agency, during Monday’s CDF meeting. “The increased demand for that type of space and the government and private investment in that type of research and innovation has really driven those turbulent prices up.”
Prelude Therapeutics received the largest adjustment at $960,000 in additional funding, which raises the total state grants it has received to $6.4 million, including a previous job performance grant. Between September 2021 and June 2022, the cost estimate per square foot increased by $122. Prelude has also signed a lease for 80,000 square feet at the Chestnut Run Innovation & Science Park (CRISP).
Prelude has drawn international attention for its work on small molecule inhibitors, a developing therapy that is more targeted in approach with fewer side effects than traditional cancer therapies like chemotherapy or radiation.
“When we started this project back in September, we really didn’t understand some of the complexities of working at the CRISP,” Prelude Therapeutics Executive Director of Facilities Tim Mueller said.
Among the challenges at CRISP, a redevelopment of DuPont’s former Chestnut Run labs, are the need to install boiler plants to power the lab and chillers to cool down equipment. Prelude also is contending with a 84-week lead time on an electrical transformer and switchgear. As a backdrop, the MRA Group closed the deal with Dupont on Dec. 1, which pushed back the overall planning process.
“We were all trying to figure out what the outcome would be, and there can be a lot of assumptions of what we’re building. Ultimately, I think we came to a great place,” Mueller added.
Prelude anticipates launching its operations at CRISP in late April 2023.
ABS, a company that manufacturers cells and biological material used in biopharmaceutical research, received an additional $400,000. That raises the total state grants the firm received to $1.6 million, including a previous job performance grant.
Back in December 2021, when ABS first applied and received the lab grant funding, costs were estimated at $188 per square foot. Today, it’s estimated at $219 per square foot.Â
Olson said that ABS was considering “scaling back and cutting out of the complexity of the space” from its previous plans at the former Discover Bank offices at 2 Read’s Way in New Castle due to rising construction costs.
“I don’t know if it’s anything in particular that stands out [for cost increases]. For the growth of the industry in general, it’s HVAC and steel reinforcement for it. But it’s pretty much across the board,” ABS President and CEO Charles Saller said.
ABS plans on bringing 37 jobs to Delaware over the course of three years, with salaries averaging $55,000 to $140,000. The company had searched for a location for about two and a half years, and aims to open its labs in March 2023.
Finally, AMT was approved to receive an additional $247,600, bringing the total of lab space grant funding it received to $956,305. The company produces unique chromatography materials used in the separation of chemical compounds. Early cost projections in June 2021 had the lab space at $537.85 per square foot. Today, a quote runs $599 per square foot.
AMT Senior Research Scientist Jason Lawhorn explained that the company is seeing expense costs rise by 20% for fiberglass for fume hoods and steel prices among other increases. AMT also underestimated the need for some equipment, and will be adding additional chillers to reduce emissions. But Lawhorn added that the company was looking to make the lab more efficient, by refitting space and finding improvements throughout the process.
“This has given us a chance not only to take on more space, but to significantly increase the efficiency of the operation by starting from scratch, he said. “By laying out the manufacturing flow the way we would like and adding an engineering facility, we can convert a new area that will be totally dedicated to research for developing new products.”
After a three year search, AMT will expand its space at the Buccini/Pollin Group-owned Concord Plaza by almost 12,500 square feet. It will also create 35 jobs over the next three years, with salaries between $55,000 and $150,000.
