Henrico officials planning push to attract bioscience wet labs

Hoping to attract bioscience research and development “wet labs” to Henrico, county officials are considering building a speculative facility that could house several of them – and they’re planning to slash the business personal property tax rate such businesses would pay, to one of the lowest levels in the state.

The two plans, proposed publicly by Henrico Economic Development Authority Executive Director Anthony Romanello during a day-long Henrico Board of Supervisors retreat Jan. 22, could position Henrico to take advantage of a demand for such lab space locally and statewide, while building upon its growing bioscience presence, he said.

Henrico already is home to several key R&D firms – including Innsbrook-based GENETWORx and Westwood-based PPD – and there are some 650 bioscience firms in the Metro Richmond region overall, Romanello said. The Virginia Economic Development Partnership has received requests from prospective R&D businesses during the past two years for nearly 1 million square feet of lab space in Henrico, Hanover, Chesterfield and Richmond combined; statewide requests have amounted to about 100,000 square feet each month, he said.

But “there is nearly no product available in the Greater Richmond area, nearly no product available in the commonwealth of Virginia,” he said.

That’s in part because few developers are rushing to build speculative buildings for wet labs, since the cost can range between $400 and $1200 per square foot, Romanello said. (A wet lab is one in which chemicals, drugs and other biological matter can be analyzed and tested through the use of liquids.)

“It becomes very difficult for developers, architects, engineers, property owners to take the risk with such a high basis for speculative lab space,” he said.

But if the county had such space ready – perhaps a 100,000-square-foot (or larger) “shell” building at the county-owned White Oak Technology Park, one possibly constructed through a partnership with a private firm – it would have a key advantage, he suggested.

Such a building would have a number of HVAC, water and sewer connections built in but would allow prospective tenants to upfit the interiors to their specific needs themselves, Romanello said. It could help Henrico make an attractive pitch to bioscience firms that are looking for R&D space, he said.

And that pitch would be enhanced in a significant way by the county’s planned creation of a separate business personal property tax rate of less than $1 per $100 of assessed value for R&D firms – the lowest such rate of any major Virginia locality. (R&D firms in Henrico currently pay $3.50 per $100 of assessed value; at that level, Henrico ranks in the middle of the top 10 localities in the state. Prince William leads the way with a rate of $1.)

“This is something that has not been done before, but we think the upside is significant,” County Manager John Vitholkas told the county’s board of supervisors during its retreat. “There’s an opportunity in an emerging field, with lab space. We’re a beacon, and the opportunity. . . is out there.”

Romanello’s office also has identified a handful of vacant office buildings in the county that could be retrofitted for use as wet labs. And he suggested that the transformation of the former Toys R Us location on Quioccasin Road to a lab could be the first of several examples in the county of a big-box-store-to-R&D makeover.

“We believe here in Henrico that we are well-positioned to grow,” Romanello said.

Dropping the R&D business personal property tax rate to $1 would cost the county about $1.5 million in annual tax revenue from existing firms, Vithoulkas said. Supervisors Tommy Branin (Three Chopt) and Tyrone Nelson (Varina) wondered aloud whether it would make more sense to create a rate well below $1, and Vithoulkas told them his budget proposal would include one.

“Going from $1 then to 98 [cents] or 95 [cents] is almost immaterial,” he said. “We can absolutely do it. Can we go to 90 [cents]? Let’s see.”

Branin suggested that that approach, combined with the idea of building a facility that has enough room for future growth – perhaps 150,000 square feet or more – would be wise.

“If we’re going to be competitive with [other localities], I would want to be more competitive than them,” he said. “If we’re going to go, go big, right?”

Henrico has had success lowering the business personal property tax rate to attract other specific types of businesses in the recent past; in 2017, it slashed its rate for data centers from $3.50 to $0.40 just before landing the Facebook Henrico Data Center and several others.

Before that move, the county was receiving about $2 million in annual revenue from data centers; now it’s earning about $8 million a year.