Much of the world’s progress is related to the innovative work of scientists, engineers and entrepreneurs who require state-of-the-art facilities to achieve high levels of productivity. That’s where laboratory construction comes in, and the market is poised for an international growth spurt.
Global research and development spending is expected to expand by roughly 5.2 percent in 2012 to more than $1.4 trillion, according to Battelle
and R&D Magazine
. This follows a rebound of 6.5 percent in 2011. Most of the growth in global funding is in Asia, where spending is expected to increase nearly 9 percent in 2012. Research and development will expand about 3.5 percent in Europe and roughly 2.8 percent in North America—with the U.S. market projected to grow 2.1 percent in 2012 to $436 billion.
Given America’s high costs of living and labor, U.S. contributions to the global economy will be disproportionately related to capital-intensive activities in information technology, electronics, defense technologies, the life sciences, alternative energy and other cutting-edge disciplines. But America appears to be losing market share where it matters most. In 2010, the United States represented 32.8 percent of global research and development spending. This proportion slipped to 32 percent last year and is expected to fall to 31.1 percent this year.
Some of America’s drooping market share can be expected given the rapid emergence of several Asian and Latin American economies, but certain U.S. factors play a role as well. For example, federal government spending on research and development is predicted to decline by nearly 2 percent in 2012 to $125.7 billion.
However, the decline in federal spending is offset by strong increases in industrial research and development spending. This year, energy-related research sponsored by U.S. manufacturers and technology providers will reach an estimated $6.7 billion, up 23.1 percent from 2011. Research and development related to information and communication technologies is projected to increase nearly 10 percent. Research expenditures in the chemicals and materials segment is expected to rise more than 11 percent, though spending in life sciences is projected to decline nearly 6 percent. Construction Opportunities Abound
While the nation could benefit from a more supportive environment for laboratory construction, the growth that is taking place is increasingly translating into building opportunities. Despite what has been a soft economic recovery to date, laboratory owners are moving forward with new facility designs and renovations. More than half of respondents to a recent R&D Magazine
survey are planning some form of laboratory renovation or improvement during the next two years, though certain decisions regarding layout, design and mechanical systems have been changed due to budgetary considerations and an ongoing shift to greener labs.
Although 41 percent of surveyed readers said their laboratories are less than five years old, only 14 percent rated their facilities as “state-of-the-art,” indicating a level of inadequacy in previous facility investment or the growing expectations of lab users. More than half (57 percent) of respondents said their facilities require updating. Additionally, 19 percent identified a need for energy-efficiency improvements and 7 percent said their facility did not meet safety standards. When asked what features respondents would like in their laboratories if cost were not an issue, the top three answers were energy-efficient HVAC systems (90 percent); flexible design (84 percent) and high-efficiency lighting (81 percent). Costs on the Rise
The cost to build labs is on the rise after several years of decline. Last year, costs rose roughly 4 percent from the previous year, and were up 5 percent between January 2011 and June 2011, according to Laboratory Design
. For nanotechnology research facilities, costs per gross square foot rose from a range of $540–$625 to $650–$850 last year. Additionally, the cost of constructing software development labs and chemical research facilities increased roughly 3 percent last year.
Design represents a critical component of the laboratory development process. Last year, architectural services represented 38 percent of the cost of a lab, while costs related to the building structure represented about 13 percent. Other key cost categories by trade were HVAC and controls (17 percent), electrical and security (10 percent), and plumbing and fire protection (8 percent). As laboratory construction accelerates in 2012 and 2013, construction costs should rise more briskly.
That said, the United States is a bargain compared to other parts of the world. For instance, relative to construction costs in the New York tri-state area, lab construction costs are 82 percent higher in Tokyo; 46 percent higher in Amsterdam and Frankfurt, Germany; and 41 percent higher in Melbourne, Australia. However, costs in Bangalore, India, are roughly half of what they are in the New York area.
As with other aspects of the construction economy, the laboratory market is set to rebound. Despite expected declines in federal research and development, private funding is expanding briskly and many lab users report their current facilities are inadequate.