Before You Build a Lab, Read This!

Why Most Australian Biotech Labs Never Break Even – And What Founders Get Wrong About Build Costs (PC1, PC2 & Cleanrooms)

Ask a biotech founder how much it costs to build a laboratory and you’ll usually get a confident estimate:

‘Somewhere in the low six figures, right?’

If only.

Across Australia, the reality is far more sobering: most teams underestimate true lab build costs by 40–60%, especially once they move beyond basic PC1 space into PC2 facilities or controlled cleanrooms. And the kicker? Most of that spend isn’t eligible for the R&D Tax Incentive – but a CoLabs membership is.

These blind spots don’t come from a lack of intelligence. They come from the hidden, highly technical infrastructure inside every compliant lab: HVAC engineering, contamination control, HEPA filtration, directional airflow, certification, waste, gas reticulation, and safety systems… the things you don’t notice until the invoices and quotes land in your inbox (and trust us, they keep coming).

So let’s bring some clarity to the chaos.

PC1 vs PC2 vs Cleanroom: What Do They Really Cost to Build in Australia?

Here’s the first misconception: moving from PC1 to PC2 isn’t a ‘slight upgrade.’

It’s an entirely different engineering category.

And cleanrooms? They’re on a whole other level. 

In Australia today, typical per-square-metre construction costs look like this:

These numbers are based on Australian construction benchmarks and on current Melbourne/Sydney PC2 and cleanroom buildouts completed in 2023–2025. This is also drawn from our own insights from designing and building four labs over the past few years with a range of fit-out partners. 

Why Do Founders Underestimate By So Much?

Because founders naturally budget for the visible elements:

• benches
• sinks
• power outlets
• fume hoods
• fridges and freezers 

But the real cost is hidden in the infrastructure:

• high-turnover HVAC
• ducted and HEPA-filtered exhaust
• containment airflow control
• airlocks and anterooms
• OGTR compliance / IBC 
• BMS integration
• pressure regimes
• cleanroom validation
• waste and contamination pathways
• certification and commissioning 

Most of this is invisible – until it becomes very, very expensive.

Ongoing Costs: The Monthly Reality of PC1, PC2 and Cleanrooms

Once built, labs are not cheap to run.

Here’s what a typical monthly operating profile looks like:

Why the jump?

Because as containment increases, so do the controllables:

• Higher air change rates
• Tighter temperature/humidity control
• More frequent HEPA checks
• Stricter cleaning protocols
• Faster gas consumption
• More equipment redundancy
• Constant BSC and room certification
• OGTR, TGA, GMP audits (depending on use)

At PC2 and above, you cannot operate without a dedicated lab manager. And yes – that adds another $55k–$110k per year.

One Giant Factor Most Founders Miss: R&D Tax Incentive Eligibility

This is where things get financially interesting.

❌ You CANNOT claim lab fit-out Capex under the R&D Tax Incentive.

Not PC1.

Not PC2.

Not cleanrooms.

Not HVAC.

Not airlocks.

Not extraction.

Not engineering.

Not compliance.

None of it qualifies. Because the RDTI specifically excludes capital expenditure.

But here’s the part that changes everything:

✅ You CAN claim a CoLabs membership as an R&D operating expense.

Including:

• Lab access
• Dedicated receptionist
• Cold chain delivery 
• Equipment access
• Compliance support
• Waste
• Utilities
• Gases 
• Workspace
• Storage

For an eligible early-stage company receiving the 43.5% refundable offset, this instantly reduces real-world costs by almost half, which is pretty wild. So naturally, for many founders, this benefit completely flips the financial equation.

Why Serviced PC1/PC2 Labs Are Becoming the Default Choice

In a world where PC2 labs cost $1.2M–$2.2M to build and $30k–$44k per month to run (and cleanrooms cost even more), founders are realising:

There’s no strategic advantage to building your own lab.

There’s only risk, delay, and non-claimable Capex.

Serviced labs, by contrast:

• Eliminate Capex
• Eliminate construction risk
• Offer faster time-to-science
• Reduce monthly costs
• Reduce payroll
• Improve runway
• Are R&D Tax claimable
• Scale with the team
• Include shared equipment
• Eliminate equipment downtime
• Eliminate compliance overhead
• Are flexible as the company pivots

This is exactly why global players – from LSI to BioLabs to Newlab – built their models around this shift.

And now, CoLabs is bringing that capability to Australia at scale.

The TL;DR

Whether it’s PC1, PC2, ISO 8, or ISO 7, the economics all point to the same truth:

Building labs burns capital.

Renting labs extends your runway.

And only one of those approaches is R&D tax-deductible.

With biotech moving faster than ever and capital efficiency becoming a competitive advantage, founders are choosing flexibility, speed, and claimable OPEX over multi-million-dollar fitouts and decade-long ROI timelines.

The question is no longer:

‘Should we build our own lab?’

It’s now:

‘Why would we build when we don’t have to?’