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Building a lab? Seoul, Paris and Rome are cheap, but try Jackson.

When selecting a foreign land in which to locate a research lab, pilot plant, or manufacturing facility, it is important to understand that design and construction costs will vary from one location to another. Not only will lab construction costs generally be different in North America, Europe, and Asia, but local variations within each continent will also be seen.

To better understand these variations, Haines Lundberg Waehler International (HLWI), a New York-based architectural/engineering/interior design firm, together with Accu-Cost Construction Consultants Inc., a New York-based cost-consulting firm, have developed a global index of construction costs for laboratories, animal research facilities, and process/pilot plants. This index represents costs compared to construction costs within the New York metropolitan area.

However, Robert Djerejian, HLWI's senior managing partner, cautions not to assume these construction costs are the sole indicator of development costs. "For instance, land prices in Tokyo, Hong Kong, Taipei, London, and Berlin are far higher than in New York, creating an overall higher development cost."

North America and Europe

The U.S., Canada, and a majority of European countries have well-established and predictable construction costs for their various regions. That's because these communities are satisfactorily serviced by many competing suppliers of laboratory and industrial products, and skilled construction labor is readily available.

Be aware, though, that "the methods of bidding and contracting vary between the two continents," says Stuart Pertz, HLWI's director of UK and European projects, "from a negotiated contract price in the U.S. to a quantity survey approach in most of Europe, with costs, construction timeframes, and product quality being nearly identical."

Asia/Pacific Rim

Conversely, the Pacific Rim is both unique and geographically diverse. It varies from the more predictable markets of Japan, South Korea, Taiwan, Singapore, and the Philippines, to the challenging and less predictable emerging nations, such as Malaysia, Vietnam, Thailand, Indonesia, and the People's Republic of China.

These emerging Asian nations have good growth potential in process/pilot plants and manufacturing facilities, but have little near-term expectations for new basic research facilities.

China represents the largest of these markets, with a practically limitless labor force that, by mandate, must be used. However, Chinese labor rates are regulated by the government and do not necessarily reflect actual wages nor the cost for training. Today, with few local suppliers of laboratory and industrial products, 60% to 80% of the building materials and construction equipment must be imported. An excise tax and import duty on all products raises what would be an abnormally low total construction cost to one that is just at or below U.S. and European price tags.

Many specialty finishes are difficult to achieve, and long construction periods can be expected, due to logistical problems related to the delivery of materials, especially inland. Accelerated, or "fast track" construction programs, are currently difficult to implement. The good news is that free trade zones have been established in selected coastal cities to promote faster development of the construction industry.

"The expected return on investment in China is four to five years, compared to nearly 20 years in the U.S.," says Yu-Heng Shang, HLWI's director of Asian projects. "Annual rents in the more attractive parts of many major Chinese cities are now approaching the base building construction costs."
Construction Cost Index for North America

Anchorage                             100
Atlanta                                75
Baltimore, Md.                         85
Billings, Mont.                        60
Boston                                 90
Chicago                                90
Cleveland                              90
Dallas/Fort Worth                      76
Denver                                 80
Honolulu                               95
Houston                                75
Jackson, Miss.                         65
Los Angeles                           100
Mexico City                            70
Miami                                  70
Minneapolis                            85
Montreal                               95
New York City                         110
Orlando, Fla.                          70
Phoenix                                75
Raleigh, N.C.                          75
San Francisco                         110
Salt Lake City                         78
Seattle                                85
Topeka, Kan.                           69
Vancouver, Canada                      92
Construction Cost Index For New York
Metro Area
(Dollars/gross [ft.sup.2])

Biotechnology lab                     275
Chemistry lab                         290
Process/pilot plant                   310
Animal facility                       340
Construction Cost Index For Asian Cities

Beijing                               85
Bangkok, Thailand                     90
Bombay, India                         95
Chungking, China                      90
Hong Kong                             80
Jakarta, Indonesia                    95
Kuala Lumpur, Malaysia                90
Osaka, Japan                         120
Sydney, Australia                     90
Seoul, South Korea                    83
Taipei, Taiwan                        85
Tokyo                                130
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Title Annotation:Jackson, Mississippi
Author:Drake, Ken
Publication:R & D
Date:Oct 1, 1994
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