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Fig 1. This cost model offers a graphic picutre of issues involved in lab facility renovation, including cost savings renovation may yield, and premiums renovation may entail. All diagrams: SmithGroupJJR   

The collapse of the United States housing market in 2007-08 precipitated a nearly commensurate downturn in new nonresidential construction during the past few years, choking off capital funding for many projects. And, although the President's Plan for Science and Innovation promised to double the National Science Foundation's budget by 2017, economic volatility and uncertainty have had a dramatic impact on the plans for, and the conduct of, research and education in the private and public sectors, leaving research organizations with less national funding. The result: Organizations are turning to renovations to meet up pent-up space demand and potentially save money.

The inherent limitations of existing facilities—safety, energy performance, floorplate and height constraints, and so on—can make renovation an extensive and expensive undertaking. Let's explore a "Top 10" approach to analyzing the "renovation vs. new construction" dilemma.

Why renovation isn't always economical
It's true that the direct cost of totally replacing laboratory facilities is usually more expensive than a partial re-do. But how much more expensive is it, really? What are the hidden costs, and in what time frame, with what level of disruption? Is there a tipping point where renovation just doesn't make true "value" sense? Let's count down the major considerations. Here are 10 potential problems with renovation:

10: Renovation and repurposing are more expensive than most clients perceive. "We have the building; it has the donor's name on it; it has a sound structure," they will say. "Yes, it is 35 or 40 years old; but surely we can save the structure and exterior." For a contemporary laboratory building, however, the cost of the core and shell constitutes only 30 to 40% of the pie. MEP systems, equipment and interior systems are where the major cost lies, at 60 to 70% of replacement value.

9: By the time most building owners contemplate a renovation, the HVAC system is typically beyond its useful life. This means replacing air-handling units, chillers, and boilers (if the building is not on central plant distribution), usually accounting for 35 to 40% of the replacement costs. In addition, if the new program includes tech-heavy spaces, like core labs, a vivarium or a cleanroom, the overall capacity of existing HVAC systems may be far exceeded.

8: If most of the existing building is occupied, the cost of upgrading or replacing systems often surpasses the baseline price. Occupancy during construction requires complicated phasing logistics as work proceeds by wing or by floor. Recently, our firm was involved with a 200,000-ft2 renovation that required a master plan strategy to be phased over a nine-year period due to the unanticipated extent of systems replacement and planning reconfiguration.

7: Executing a renovation in a way that minimizes disruption or downtime can add 3 to 5% to the project's general conditions and contingency. Most multi-story laboratory buildings are occupied functionally by floor; most MEP systems are distributed vertically by wing. This dichotomy of functions typically forces disruption or temporary relocation to partial areas of departments for multiple users.

6: Hidden costs are common in renovations: issues that are not obvious without penetrating ceilings, walls or grade-level slabs. As-built drawings for older buildings, even if available, do not accurately represent existing conditions or the level of construction quality. One of our clients recently acquired a facility on a lease-purchase, as-is agreement. The client expected that trenching and partial replacement would be sufficient for improving the underslab acid waste system. When the system was tested before starting demolition and construction, major leaks were discovered. Ultimately, the whole system had to be replaced.

5: Before starting design, carefully evaluate whether the proposed program requirements are a good fit with existing or previous-use program requirements. If not, consider it a red flag. Converting biosciences laboratories to chemistry laboratories will demand more air volume to accommodate increased hood density and higher air change rates. Converting an incubator laboratory facility to a vivarium requires more than the minimum of 10 ACH, even with ventilated racks. We encountered this situation at a recent repurposing and renovation of an incubator laboratory. The facility required new air-handling equipment, completely new HVAC duct distribution, thermal modifications to the exterior skin, and completely new plumbing systems. This "system upgrade" is approaching 75% the cost of total replacement.

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Fig 2. The Condition Index is a calculation that can help guide the "renovate vs. new" decision. It is calculated by taking the number 1, subtracting the cost of renovations divided by the replacement cost value, and multiplying by 100. The lower the index number, the less sensible renovation is likely to be.   

4: The existing building envelope probably will fall short of new ASHRAE standards for energy reduction. It's difficult to meet ASHRAE 2009 guidelines—even if you add energy recovery and high-performance hoods to your systems mix, and replace windows with high-thermal-insulation glass. Teams creating brand-new buildings are finding it tough to hold the line on operating budgets while providing appropriate power and air to the programs inside; doing this in a renovation is even harder. Today's sustainable approaches to design are going beyond LEED Platinum. (For example, a recent electrical and computer engineering laboratory building is designed at 46% below ASHRAE 90.1 2007, and a new computer data center being built as part of a major research complex will achieve net-zero energy requirements.)

3: To determine whether the structure is sound (in order to save the 10 to 12% full replacement value the structure represents), the facility must be evaluated against current seismic standards for the region, which certainly have evolved over the life of the structure. Research needs have also continued to morph with the introduction of ever-more-finicky equipment. Core labs with vibration-sensitive imaging equipment need 1000 mm/sec rigidity. Pathways to core rooms for large MRIs, even in basements, need thick enough slabs to support the equipment as it travels down the corridor and through access areaways.

2: If the building is fully occupied, temporary relocation costs must be considered as part of the economic value analysis. This may include both relocation and leased space costs if adequate "surge" or "swing" space is not conveniently available. Although more space for relocation may be difficult to negotiate with department heads, the hassle is inversely proportional to the cost of phasing the project over a longer time frame, or incurring increased contingencies for overtime labor rates.

1: Finally, if there's a rush for a quick gut assessment before putting a project into a capital appropriation plan—in advance of a good feasibility study—check the floor-to-floor heights. Today's projects demand a 16-ft floor slab separation for wet labs. You may squeak by with somewhat less, but designing for shallower ducts will increase static pressure, lowering operational efficiency. The overall renovation cost should be calculated and analyzed as cost per NASF (net assignable f2) instead of cost per BGSF (building gross ft2), since the additional systems distribution will add shafts or require interstitial space—lowering the usable/GSF percentage to as low as 38% (far below 65% acceptable efficiency of new open lab planning).

Fig. 1 offers a graphic picture of some of the concepts discussed above. Clearly, renovation involves some knotty cost issues.

Why renovation might make sense anyway
Some clients consider these points and still say, "The capital budget just won't let us build new!" Let's assume you've modeled the "renovate, repurpose, or replace" scenarios, as discussed above. You still need to consider some evaluation criteria to support the renovation strategy before making a final decision.

Here are 10 specific scenarios in which renovations can still make good sense:

10: The facility (although several decades old) has been well-maintained. It is tied into campus central utilities that have adequate capacity of steam and chilled water, and the air-handing units have been replaced (or major upgrades performed) toward the end of the ASRHAE useful life schedule. The projection in this scenario is that the facility has adequate systems capacity to meet new demands for flexibility with minor upgrades—perhaps new control systems and new high-performance hoods with motion sensors to lower energy costs.

9: The building includes under-utilized space due to a downturn in enrollment and/or staffing; you have long considered this a problem. That space is now an asset if it can provide swing space for temporary program relocation. A campus heritage building we recently worked on had half the third floor vacant; renovation to the open-plan lab concept could be completed in three logical phases because this swing space was available. (Other phases included ADA upgrades and an expansion for new gathering and reception spaces—giving the older facility a new image at $163/gsf, or 40% the cost of a replacement of equal capacity.)

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Fig 3. There are many pros and cons in the renovate/replace scenario; this scorecard provides a quick summary.   

8: The economics of a facility renovation pass the Condition Index test (Fig. 2). The Condition Index is the number 1, minus the cost of renovations divided by the replacement cost value, times 100. The tipping point is for a feasible renovation is between 25 and 50. Any number below 75 usually means major repurposing at the very least; numbers above 75 mean renovation might be fine. If the index is <25, new construction is the best choice. Total replacement of MEP systems, laboratory equipment and interior systems, with exterior energy upgrades, will usually reach this threshold.

7: The cost of energy upgrades will achieve a seven-year payback in operational savings. Such renovations can be phased based on capital budgets. Triple-glazed exterior windows, green roofs, energy recovery systems, and stormwater harvesting are feasible strategies that typically provide good value.

6: The HVAC and plumbing systems require minor upgrades to achieve desired program flexibility and adaptability. The trend in research buildings is a lower percentage of wet labs, with movement toward more computational work and dry labs for clinical and translational research. The wet-to-dry lab ratio is approaching 50:50 for biomedical research programs. Such a scenario might mean your HVAC system and plumbing don’t need a major overhaul.

5: Efforts for facilities to be more customer friendly as well as code-compliant require renovation of entrances, hallway doors, and restrooms. These renovations are minor and are usually needed regardless of the building’s function as a lab. The cost of a recent heritage building’s Phase 1 renovations for ADA and fire protection improvements was less than $1.77 million for an 117,000 ft2 facility.

4: The structural capacity is appropriate for seismic code requirements and can also meet the functional program conditions. Seismic code requirements vary considerably by region, but most can be met with the installation of cross bracing between floors.

3: The renovation makes sense in light of a larger master plan. In evaluating an overall campus strategy, consider downgrading the complexity of program use in existing buildings, replacing wet labs with offices, clinical labs or computational labs. When developing a fiveyear master facilities plan, pay close attention to the MEP demands of any potential building use. A typical engineering school complex may have a range of program needs (for instance, 40% faculty office, seminar classroom, and class labs; 30% wet labs for chemistry and materials; and 20% percent intensive high bay, core lab, and cleanroom areas). A university client recently acquired more than 2 million ft2 of research space vacated by a major pharmaceutical company. Through a facilities assessment, program modeling and scenario planning approach, various options were developed to guide decisions on which facilities could be reused or repurposed at the best value occupancy for their programs.

2: The proposed reuse demonstrates appreciable capital cost savings. Say the average costs of new laboratory space for your project are in $350 to $475/ft2 range, and renovation costs are projected in the $150 to $220 range. This scenario is promising as long as the true costs are fully analyzed (as discussed above); an appropriate facility condition assessment and proposed program statement of requirements can usually be accomplished in three to four months.

1: Given that other considerations are met, the top reason to move forward with renovation relates to the considerably shorter time frame for occupancy: perhaps as little as six to nine months, vs. two to three years (or more) for a new building. This time advantage can be especially critical in providing fitted-out lab space so you can meet the requirements of a top new researcher or score a crucial grant.

Each of these considerations has an associated cost impact. Renovation can be full of unpleasant surprises unless a systematic value analysis process is applied. A facility condition assessment, preliminary program of requirements, and replacement cost model are valuable tools in making an informed evaluation of a single building, a complex, or even an entire campus.

Fig. 3 provides a summary scorecard of the "renovation vs. replacement" decision. With a good analysis, you can move forward feeling confident that you’ve made the best possible choice for your organization.

Andy Vazzano is Science and Technology practice leader at SmithGroupJJR (www.smithgroupjjr.com). Vazzano is the recipient of the Henry Adams Award of Excellence in Architecture and frequent presenter at research and laboratory industry symposia, conferences, and seminars. He has provided the inspiration for the SmithGroupJJR research project Lab 2030.

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