SF Peninsula R&D Vacancy Dips for First Time in Two Years
Vacancy in the San Francisco Peninsula R&D market has declined for the first time in more than two years. The amount dropped to 24.4% in the three months ending December, from 25.9% in the previous quarter, according to a report from Colliers.
This fourth quarter shift suggests that excess space accumulated during the broader tech slowdown is beginning to rebalance. The improvement aligns with modest absorption and a slowdown in new supply, indicating that tenants are selectively re-entering the market for high-quality, well-located R&D facilities.
Meanwhile, San Francisco life science leasing surged dramatically, with the Peninsula accounting for 86% of all Bay Area life science deals in Q4. Total leasing reached 1.9 million square feet, an 89% increase over the 10-year quarterly average, according to Kingsbarn Realty Capital.
Major commitments from companies like Vaxcyte (258,581 square feet) and Genentech (230,592 square feet) underscored renewed confidence in long-term biotech growth.
The Kingsbarn report showed that Bay Area life science vacancy tightened slightly, falling 30 basis points, while rents remained among the highest in the region at $6.98 NNN.
The Stanford Research Park was home to the largest R&D lease signed in Q4 when a confidential tenant renewed its 362,434-square-foot space, according to.
About 58% of lease transactions in Q4 2025 were for 10,000 square feet or smaller and approximately 44% occurred within life science properties, CBRE reported.
Technology tenants represented 44.1% of the top 15 deals completed during the quarter. The overall average direct asking rate for R&D/life science space along the San Francisco Peninsula decreased 4.5% year-over-year, ending 2025 at $6.12 on a weighted monthly, NNN, direct basis. R&D and life science product averaged $4.71 and $6.43, respectively.
Bay Area life science
CBRE reported that landlords, rather than dropping rates, are repositioning their assets to accommodate a broader range of tenants and offering competitive incentives.
The most notable sale in Q4 2025 involved 3350 W Bayshore Rd in Palo Alto. Strada Investment Group purchased the 60,000-square-foot life science building from Alexandria Real Estate for $29 million or $483 per square foot.
Other notable construction completions in Q4 2025 were the final building at Elco Yards, The Shop in Redwood City. The 225,000-square-foot Class A Life Science space was 100% preleased to a confidential tenant.
The entire 73,400-square-foot R&D building, The Cannery in Palo Alto, was completed, leased and delivered by Dynatomics.
Source: GlobeSt/ALM