Trailhead BioSystems Inc., a biotech startup, sought to relocate after recognizing their current lab space was not meeting their needs. Because developed lab space is extremely expensive to acquire, the team at Trailhead was looking for office space that could be built out to match their specific lab requirements.
Costs were an important consideration for Trailhead. Although the team was facing pressure to relocate to a new city, the lower real estate and labor costs in Cleveland influenced their decision to stay in Ohio. Additionally, the startup was raising Series B funding and needed to ensure their existing financial resources were allocated appropriately.
The team at Trailhead contacted Allegro for transaction support. Allegro's deep connections within the Cleveland market and years of CRE expertise solidified Trailhead's decision to work with the team.
In the early stages of their partnership, Allegro met with Trailhead to solidify its relocation needs. While Trailhead knew it required more lab space than its current real estate could offer, the team needed assistance in conducting due diligence to support the purchase of a building that could sustain operations as business continued to grow.
Ultimately, Trailhead was looking for affordable real estate that could be transformed into state-of-the-art lab space, a location near highly skilled workers, the flexibility to accommodate growth, and a property manager to oversee any necessary renovations and building operations.
Allegro’s real estate team immediately selected and managed a team of due diligence vendors to evaluate Trailhead’s preferred location. At the same time, Allegro’s government incentives team was busy with a request for incentives that was sent to a local economic development agency. Allegro also sent out requests for proposals to select a property manager.
After thorough evaluation of the preferred property, Trailhead acquired a 37,348-square-foot facility in Beachwood, Ohio. This new location would provide ample space for its existing 22 team members and the 47 future employees Trailhead planned to hire over the next decade.
During due diligence, a number of building concerns were revealed. The presence of asbestos in the building posed a significant environmental challenge. Furthermore, worldwide supply chain disruptions would make needed renovations—including an advanced HVAC system and a new roof—difficult and expensive. Allegro managed multiple vendors to gather cost estimates to improve the building systems.
The Allegro consulting team successfully negotiated an incentives package worth $1.9 million. It contained a real estate tax abatement, worth $678,000, and an additional $77,000 in job tax credits to account for the nearly four dozen high-paying jobs Trailhead intended to create.
Trailhead also received a state credit, worth $200,000 to support the cost of transforming the building into a cutting-edge laboratory and facility. The resulting space will allow Trailhead to continue work in specialized human cells, drug discovery, and human disease investigations.
The work completed and incentives won by Allegro’s expert teams led to Trailhead’s successful relocation and CRE buildout. This facility not only accommodates Trailhead’s expanding operations, but also creates future research jobs to contribute to Cleveland’s growing life sciences industry.
Do you have a similar commercial real estate need that could qualify for economic incentives? We can help. Contact us to discuss your real estate needs today.
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