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Research Facility Construction Showing Signs of Life – Maybe, Maybe Not

7/2/2012 | Construction Blog

Some new numbers compiled by Battelle and R&D Magazine suggest that construction spending is on the rise in the research sector of the economy. It seems lab owners in all disciplines are interested in building new facilities or renovating existing ones in order to keep up with ever changing technological advances and to meet certain “green” goals or safety concerns.

Globally, the experts project a 5.2% increase in spending, to $1.4 trillion, in 2012. Asia leads the way with an expected boom of 9% more spending. North America is expected to have more modest growth at 2.8%. The North American numbers are driven largely by a 2.1 increase in R&D facility construction work in the United States.

While construction spending on research facilities is going, up, so are the costs to perform such work. Costs associated with the construction of research labs is up 4-5% over the last year. This represents, as an example, an increase from $540-$625 per gross square foot to $650-$850 per square foot for nanotechnology lab space. The bulk of these increased costs seems to be in design services, which is typically coming in around 38% of the project cost.

At first glance, these numbers might suggest that construction spending in the R&D market is on the rise and more projects may be on the horizon. Increased spending alone, however, is not necessarily indicative of whether there is more construction work to be passed out. Instead, increased spending could mean nothing more than the same number of projects are now costing more to build. This correlation seems possible given that the areas in which the biggest increases in spending are taking place are also the areas with the highest labor costs (Asia leads in both categories). Another standard measure, like an increase in the purchase of materials, would lend credence to predictions that this market is growing again.

Still, the numbers offered by R&D Magazine offer some encouragement since those polled suggest that they believe their lab space is completely outdated or in need of minor renovation to keep up with the times. Only time will tell if the numbers reported by R&D Magazine are worth getting excited about.