The Greater Dallas region is thriving as an emerging life sciences market in the U.S., having seen consistent growth and expansion in the past decade. The Texas university system has been a vital source of educated and entrepreneurial talent, and the state has committed many resources to supporting the infrastructure needed for the biotech industry.
This has resulted in the development of high-profile campuses like Pegasus Park, a 26-acre site with 750,000 square feet of tenant space. Pegasus Park has evolved into a complete life sciences ecosystem, with lab suites offering flexible spaces for researchers, along with spaces for start-up companies, venture capital firms, industry mentors, commercial tenants and support functions, such as dining facilities and shopping. Big names, such as BioLabs and Bridge Labs, have already made the campus home and are joined by dozens of other organizations working on the latest innovations and breakthroughs.
It was no surprise when the Biden Administration announced in September 2023 that Dallas would be home to the Advanced Research Projects Agency for Health (ARPA-H) Customer Experience Hub, one of three regional hubs. This agency is tasked with accelerating the process of turning research ideas into actionable solutions for the most challenging health issues. At $2.5 billion, this represents a huge commitment by the federal government and a logistical challenge for the region to assemble the facilities, workforce and resources needed to achieve this lofty goal.
Naturally, this activity in the region brings new considerations to the multitude of facility owners, site brokers and construction firms involved in the life sciences industry. With a limited supply of suitable spots for greenfield development and the associated high costs of a new build, along with existing campuses like Pegasus Park being earmarked for ARPA-H infrastructure, where do many other organizations go to find space to meet their needs? With industrial vacancy rates below 10% in the region and higher interest rates slowing the pace of new construction, companies are looking at alternative strategies to make the best use of their capital while still meeting their needs. The answer may lie within the concept of adaptive reuse, through which an existing facility is repurposed and given new life.
New Life for Fallow Structures
Across the country, and certainly in Dallas, vast numbers of nonindustrial properties sit vacant, waiting for the right occupant to breathe new life into them. Consider the legacy multi-building campuses of bygone companies and the countless office structures with rising vacancies in the post-COVID-19 environment as organizations shifted to remote work. Wide-open and vacant warehouses and distribution centers represent a blank slate for countless interior fit-out possibilities in a ready-made building shell, as do big box stores in prime locations that closed during the Great Recession. All of these, with the proper vision and resources, have the potential to be a home to the next generation of collaborative innovators and organizations.
Indeed, the adaptive reuse and repurposing of existing infrastructure has many upsides. First and foremost are the economic advantages of leveraging existing infrastructure, such as site utilities, parking and the major structural elements of the building. Given escalating costs and rising inflation, the best cost-saving measures can often be a strategy of not having to spend money on something in the first place! There are also sustainability benefits inherent to reusing existing physical resources, limiting the utilization of new building materials and consuming less energy during construction. Concrete foundations, structural steel, roofing material and utility piping all have a significant material footprint, and reuse is among the best methods to lower consumption. Speed to market also adds tremendous value, allowing organizations to skip some of the more time-consuming processes of site permitting and significant infrastructure development, such as site grading, underground utilities, drainage, etc. Depending on the jurisdiction, permitting can take several months, so eliminating it has the potential for significant schedule compression.
In our industry, we encounter some amazing and innovative projects, and there is frequently the sense that almost anything is possible. Adaptive reuse projects in the life sciences perfectly encapsulate this sentiment. We at Haskell consider ourselves “optimistic realists,” seeing the potential of a property through the eyes of our clients but also staying attuned to the limitations and constraints of any particular facility.
Due Diligence is Critical
Adaptive reuse projects can be incredibly rewarding and give a second life to a facility. They can also come with many complexities, including regulatory topics, hence the need to bring a knowledgeable guide and a depth of technical resources to accompany the journey. Some of the more relevant questions to consider include:
- Zoning: Is the intended new facility use acceptable within local, state and federal zoning requirements? Is a zoning change required (and possible)?
- Transportation Logistics: Can the proposed location’s transportation infrastructure support the logistics of inbound raw materials, outbound finished goods, employees and service providers? Most life-sciences facilities do not require rail service, though it may apply to certain high-volume and specialty products. More likely is a need for proximity to major airports for products with short lifespans, such as radiopharmaceuticals and cell therapies, that need to reach their intended patients quickly. Are critical materials and feedstocks readily available in the region?
- Property Configuration: Can the property support new construction or modifications to existing structures? Are there enough lay-down or staging areas for contractors to perform their work? Do the layout and existing adjacencies, including any required setbacks, allow operations as needed?
- Building Codes: Does the project comply with the International Building Code (IBC) and International Fire Code (IFC)? Does the strategy account for any facility changes (such as introducing chemicals or increasing the number of occupants) that would trigger new requirements in local Electrical, Plumbing, Fire Protection, and Mechanical Codes, to name a few?
- Environmental: Is any abatement required (asbestos, previous contamination, etc.)? Are there any potential elements needing input from the Texas Commission on Environmental Quality (TCEQ) related to waste disposal, hazardous materials handling and pollution control, or related permits to air and water quality?
- Structural Conditions and Capacity: Can the structure handle the new loads from heavy equipment or hung items like pick points or pipe supports? Is there a need to reinforce the slabs on grade, columns, walls, or roof joists?
- Existing Mechanical, Electrical and Plumbing Systems (MEP): Can the existing MEP systems be re-used as they are? Is new capacity required for any or all of the systems to accommodate the intended operational requirements? Are systems at the end of their useful life?
- Fire Safety: How do planned modifications affect the existing fire protection infrastructure? Has a flow test been performed to ensure enough water is available? Does the new use require a non-water fire suppression agent, such as a clean agent, foam, or CO2? Does introducing new spaces such as clean rooms or equipment necessitate updated fire safety measures, emergency exits, alarms, and fire suppression systems? Should supplemental measures, like fire-resistant materials and rated spaces, be utilized?
- Permitting: Has sufficient time been allocated for applicable permitting? While adaptive reuse can often negate the need for site-related permitting, permits are still required for interior modifications and must be considered. Permit fees, timelines and requirements can vary by jurisdiction.
- Occupational Safety and Health Administration (OSHA): Does the design align with the operational intent of the updated facility? Does it follow best practices for workplace safety? Are there adequate measures to support handling chemicals and implementing safety protocols, and is infrastructure, such as eye-wash stations and safety showers, adequate? Does the Texas Department of State Health Services (DSHS) have additional regulations and guidelines for this type of facility?
- Americans with Disabilities Act (ADA) and Texas Accessibility Standards (TAS): Does the facility meet the ADA and TAS requirements and create an accessible, equitable and inclusive space for occupants? How does any new or modified layout impact these requirements?
- Waste Management: Has thought been given to how the facility will generate, store, transport and dispose of waste, and hazardous waste in particular?
- Utilities: Are there any rules, limitations, caps or conditions from local utility providers (electricity, water, gas, others)?
- Local Community: Has the project considered and abided by specific local community regulations and standards, including noise restrictions, traffic management and community engagement requirements?
- Personnel: Does the region have an adequate population of skilled personnel to support such a facility? This item is often overlooked and should be part of early due diligence.
- Taxes: Is the project properly accounting for tax requirements, such as the region’s 8.25% tax, which is applied differently to new projects (material-only) versus remodel projects (total cost)?
- Historical Preservation: Has consideration been given to regulations or preservation requirements that may apply if the existing facility is historical?
Collaborating Helps Overcome Complexities
The above questions represent a fraction of what must be considered part of any successful project execution effort. With all the complexities involved – technical solutions, regulatory compliance, unique permitting processes, mobilizing construction teams, etc. – best-in-class organizations understand that a collaborative team approach ensures the desired outcomes.
For example, a gene therapy client needed a manufacturing facility. They required significant square footage based on the many components of their manufacturing process and wanted to have adjacent shell space for expansion due to their forecasted future growth. They also required significant vertical clearance due to Heating, Ventilation and Air Conditioning (HVAC) and utility needs above their cleanrooms. Speed to market was critical – not only did they want to expedite the treatment to patients, but they also wanted to be the first to market in their competitive space.
An existing warehouse proved to be the ideal solution for them. They obtained an excellent empty facility in the right location for the right price. The facility met their requirements for square footage, and the 40-foot ceilings provided plenty of clear head space. Through a fast-track interior fit-out process utilizing modular components, they could shave approximately four months off the fit-out timeline versus what they would have encountered if they had pursued a comparable greenfield project. While this specific adaptive reuse project had some unique permitting requirements that yielded no time savings over a traditional greenfield approach, other clients have seen three- to six-month schedule acceleration on average.
Another client had an older (almost historic) building previously used for retail tenants and struggled to maintain occupancy. Despite the architectural charm of the building, it could not compete with other projects in the neighborhood, which boasted newer facilities, remodeled spaces and better energy efficiency. However, this building was in a prime location with a growing need for life sciences infrastructure and a distinct lack of options for prospective tenants.
The client saw a unique opportunity for adaptive reuse to turn the building into a collaboration space and start-up incubator, but due diligence and an engineering assessment revealed that it was, unfortunately, ill-equipped to meet the needs of a life sciences tenant. The low ceiling heights would adversely limit the working space inside cleanrooms, given the size of ductwork to achieve the necessary airflows. The aging utilities, such as electrical power and water, were also a constraint. Not only were the quantities insufficient to meet operational needs, but it was also not possible to add essential redundant systems. In the end, while it was possible to transform this facility into a life sciences facility, the outcome would not have been ideal (and not cost-effective), and our client wisely pursued another pathway for the building.
Haskell’s extensive in-house team of 2,220+ engineers, architects and construction professionals work as one to serve our clients in North Texas, across the United States and globally. We are supplemented by our trusted ecosystem of partners to bring the right knowledge at the right time to all our projects.
As the leading design-build firm in the industry, Haskell’s team of project professionals can guide your project to a successful outcome. Please schedule a consultation to see what Haskell can do for you!
About the Authors:
Michael Asher is Director of Operations for Haskell’s Life Sciences Division. He is a credentialed Project Management Professional (PMP) from the Project Management Institute (PMI) and a Certified Project Manager (CPM) from the Project Management Leadership Group (PMLG). He holds a Bachelor of Science Degree in Chemical Engineering from Washington University in St. Louis.
Orlando Rivera, B.S.C.E, MBA, CGC is a Haskell Director of Construction. He leads diverse project teams across the United States, delivering high-quality results for clients in the Life Sciences, Consumer Products, Industrial and Manufacturing markets. With over 25 years of experience in the construction industry, he has the skills and knowledge to oversee complex projects and ensure successful outcomes. Based in Haskell’s Dallas Regional Operations Center, he brings unique perspectives and knowledge of the region’s nuances. He holds a Bachelor of Science in Civil Engineering from the Polytechnic University of Puerto Rico and a Master of Business Administration from the University of Wisconsin in Madison, Wisconsin. He is certified as a General Contractor in the State of Florida.
Clint Richmond, B.S.C.E., P.E., is a Haskell Senior Project Manager for Haskell’s Life Sciences division and brings over 25 years of experience in the construction industry, having previously served in roles ranging from field engineering to site management to project management. He has worked on a wide range of projects, including cutting-edge life sciences facilities, heavy industrial, oil and gas, site development and commercial. Clint believes that safety comes first and robust planning before beginning any task is the key to managing risks. Clint is based in Haskell’s Dallas Regional Operations Center and has extensive working relationships with many local developers, trade partners and service providers. Clint’s motto is “Let’s build something cool!”
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