Real Estate Tips for Founders, With Guest Catie Tilton

We sat down with Catie Tilton, Life Science and Tech Commercial Real Estate Advisor for Newmark and asked her some of the most common questions early stage founders - like you - want to know about finding lab and office space for your early stage biotech or climate tech company. Here's her expert advice:

Q: When should an early stage biotech or climate tech company be talking to real estate experts regarding office and lab space? Why?

A: Typically, companies engage with us when they anticipate some sort of inflection point occurring in the business, whether it’s a fundraise, IPO, scientific milestone, ramp up in headcount, or existing lease/sublease expiration approaching.

However, much like having an attorney or accountant at the ready, having a relationship with a real estate professional prior to needing to start the process gives you a head start.

Q: How much time does it typically take in Boston these days to find a space? What is a reasonable budget?

A: If you asked me this question in 2020-2022, the answer would have been that you need at least 15-18 months to identify the right facility, negotiate a lease document, perform construction and move-in. This was due to the lack of existing lab or R&D space available, which made it nearly impossible for companies to avoid a construction project.

In today’s market, there’s enough existing space between subleases and pre-built (spec) suites that if you really needed to move into a new space within 3-6 months, you could likely find a facility that is not only already built-out, but fully furnished too.

A good rule of thumb would be 6-15 months in advance of needing to be in and occupying. Depending on what type of space you need (chemistry vs. biology vs. fabrication/machine shop vs. office), the timeline can be shortened. Also, given lead times for any modifications you might need to make to the space, furniture, equipment, etc., it’s always better to have more time to prepare for delays so that you’re in and operating at the same time you start paying rent.

That all said, the earlier you engage with a real estate expert, the more options you’ll be able to consider, the more leverage you’ll have in negotiations with landlords and the more enjoyable the process will be in general.

For budgeting, there’s a lot that goes into the all-in cost to lease a lab and office facility. If the space is already built-out there’s significant cost and time savings on construction. There are also many options available today that can offer office furniture and even lab equipment which saves upfront capital as well. In working with clients, our goal is always to find a solution that limits our client’s upfront capital spend as much as possible.

See below for some general cost estimates if you are looking in the Boston area:

Other fees/costs to consider:

• Security Deposit (Due in the form of cash or a letter of credit upon lease signature - usually between 3 and 9 months of the year 1 base rent and dependent on the company's financial standing)

• Attorney

• Project manager

• Architect and engineer

• Construction

• Security/AV/cabling

• Furniture

• Lab equipment

• Branding/design/signage

• Kitchen/office supplies

• Moving

Q: How do we select someone to work with on our space needs? What process should we be going through and what should we be considering as we select someone to work with?

A: First, you want to hire an adviser who has significant experience representing other biotech companies on space needs, so ask to see a list of the clients they’ve worked with in the past. Finding the right lab space takes someone who knows how you need the space to operate for your science, can identify which buildings can accommodate that use, and can point you to the right landlords to build-out and manage your facility. Hiring an adviser that works with similar companies on a day-to-day basis also means that person will have the market data and perspective to ensure you’re getting the best economics possible.

Second, the best advisers also have the resources to ensure you’re making the right decision. Those resources include space planners, project managers, cost models, etc., as well as deep relationships with landlords, attorneys, and other vendors that will need to be called upon throughout the process. It’s your real estate advisor's job to act as the point person and call upon the right resources as needed in order to pull the transaction together. That said, when you’re selecting someone, make sure you ask how they qualify and quantify options so that your executive team and board understands why a decision was made (and approves it).

Q: What is one piece of advice you would give to first-time founders as they begin their real estate journey?

A: Be patient and flexible. The process takes time and options come and go. The “perfect” solution often doesn’t exist. Your real estate advisor's job is to help you come up with your shopping list and then help you find the solution that checks off the most boxes from that list.

Leasing a facility in a location where other biotech companies want to be and choosing a building that has the right operator/landlord will ensure your space operates in the way you need it to and will give you flexibility should you require a change (i.e. expansion or contraction) during your lease term. The experienced landlords understand the ups and downs of a biotech company and therefore are best positioned to help should your company require a change.

About our expert, Catie Tilton:

Catie Tilton is a commercial real estate advisor at Newmark where she advises primarily biotech companies, ranging from early stage to big pharma, on real estate decisions. Put simply, she helps companies develop a list of requirements for a lab/office facility taking into consideration the science being done, headcount growth, budget, etc., selects the facilities that fit that criteria and negotiates the lease terms on your behalf. She is on a team of six people with 100 years of combined experience. The Newmark team advocates on behalf of its clients and recognizes the importance of identifying the right lab facility in order to advance the company’s scientific missions.

Connect with Catie on Linkedin here.