Launching an early-stage biotech startup in the Triangle is about to get a whole lot easier.

Cambridge-based BioLabs, an incubator for fledgling life science companies, is set to open an outpost in Chapel Hill’s new downtown innovation district. 

It will feature shared wet labs and co-working spaces spanning the entire third floor, over 23,000 square feet, at 137 E Franklin and the adjoining 136 E Rosemary building, currently being redeveloped by Charlotte-based Grubb Properties.

The uptick: affordable, move-in-ready laboratory facilities expected to open by mid 2023.

“For years, we’d lose companies to the Research Triangle and Durham because we didn’t have wet lab space,” said Dwight Bassett, Chapel Hill’s director of economic development & parking services.

“Now faculty-founded startups have an easy path to find shared lab environments. It will create a stronger pipeline of startups based on UNC-Chapel Hill faculty research.”

Ed Field, president of BioLabs North Carolina, said such spaces change the “economics” of how early-stage life science companies get started.

“In the past, startups used to have to sign a five-year lease, buy a bunch of equipment, and then build out a lab,” he said. “It would take millions of dollars and 12 months just to do that. With BioLabs, founders can now come in, and start doing experiments within weeks.”

Bucking the trend

A wet lab, or experimental lab, is a type of laboratory where it is necessary to handle various types of chemicals and potential “wet” hazards. In some pockets of the country, a shortage of such facilities and lab equipment is failing to meet the needs of biotech startups. Innovation, as a result, is being stifled, according to reports.

The Triangle, however, seems to be bucking this trend. In addition to BioLab’s site, the town of Chapel Hill recently approved Grubb Properties’ 238,000-square-foot, 7-story office building and wet lab facility on the 1.5-acre parcel at 150 East Rosemary, replacing the Wallace parking deck.

“The pandemic showed developers that you can’t do lab work from home,” Field said. “We’ve seen a flood of capital going towards building these spaces.” With the region’s exploding biomanufacturing industry, current projects in the pipeline could “double the amount of wet labs” in the Triangle over the next five years: “There will not be a shortage going forward.”

BioLabs, founded by physician-scientist Johannes Fruehauf in 2009, is part of a national network of co-working labs with more than a dozen sites across the country, in cities such as Cambridge, San Francisco, New York, and Philadelphia. 

The Chapel Hill location will be its second site in North Carolina. In 2016, BioLabs North Carolina launched in the newly renovated Chesterfield building in downtown Durham, just a few blocks down from Duke University. The space is now home to 40 of the most promising life science companies in the region. To date, it has created over 500 jobs and raised over $1 billion in capital.

Among its success stories: Tenant Element Genomic — a Duke University spinout –– acquired by biopharmaceutical giant UCB for up to $30 million in 2018. Another tenant, Ribometrix, landed two multi-million deals in as many years – the most recent, in 2021, a development deal with Genetech worth as much as $1 billion.

‘Urbanization of innovation’

BioLabs picked Chapel Hill for its next outpost because it wanted to be close to UNC-Chapel Hill, one of the country’s top research universities with roughly $1 billion in research annually, Field said. It also wanted to be situated in an urban setting “because that’s where all the innovation happens.”

BioLabs will be one of the main anchors of the town’s innovation district. Part of the Carolina Economic Development Strategy, the district is a partnership between UNC-Chapel Hill and the Town of Chapel Hill to retain and attract innovation-oriented businesses and talent.

Other tenants include Innovate Carolina, the University’s central team for innovation and entrepreneurship; and Launch Chapel Hill, the business and venture lab accelerator created in 2013 through another joint effort by the town, university, and county.

“Innovation is a contact sport, and there’s real power with everybody being in the [same] building. Programming can be together, and connections can be made,” Fields said.

Another perk: The district is located in Chapel Hill’s first Opportunity Zone, approved by town officials in 2019, providing tax benefits to investors. Those range from deferring tax on prior gains to sheltering future gains for ten-year investments in the zone. The program also offers additional benefits to businesses located in the buildings. Because of its tax structure, businesses can have lower cost to access capital – something that is particularly important for startups.

“It’s exciting to see that the steps we have taken to reinvigorate commercial office space and infrastructure in our downtown are yielding results,” said Chapel Hill Mayor Pam Hemminger said.

“Having year-round employees here will allow us to retain talent, create a more resilient downtown economy and make downtown a more welcoming, exciting place for everyone.”