Life Sciences Markets Show Early Signs of Recovery as Vacancy Eases
The U.S. life sciences sector showed early signs of stabilization during the fourth quarter, with average lab/R&D vacancy across the top 13 markets declining slightly by 0.3 percentage points to 23%, the first drop in vacant space since mid-2022, according to CBRE's latest data. The improvement was supported by two consecutive quarters of positive net absorption and the fewest quarterly construction completions since 2018, signaling a more balanced supply-demand environment.Boston-Cambridge remains the largest life sciences hub, with 56.3 million square feet and a 28% vacancy rate. Development is strong, with 3.4 million square feet under construction — the largest among tracked markets — and 71.6% pre-leased. The average asking rent is $83.56 per square foot, second only to New York at $96.45 and well above the national average of $69.80.
The San Francisco Bay Area follows with 43.3 million square feet and a 30.2% vacancy rate, but only 270,000 square feet under construction, highlighting constrained supply. Leasing remains robust, with 2.6 million square feet of active leasing, the highest among tracked markets.
Other major hubs show varied dynamics. San Diego (28.9 million square feet, 23.8% vacancy) and New Jersey (19.3 million square feet, 11.1% vacancy) maintained healthy occupancy, while Los Angeles (5.8 million square feet, 7.8% vacancy) demonstrated tight conditions. Conversely, Chicago (2.2 million square feet, 38.8% vacancy) continues to face elevated vacancy despite modest inventory.
Leasing activity nationwide rose to 2.5 million square feet in Q4, with the largest quarterly share of expansions in 2025, though net absorption was modest at 156,233 square feet, down from 938,000 in Q3. Construction activity fell 23% quarter-over-quarter to 4.5 million square feet, the lowest level since mid-2017, while completions dropped to just 280,822 square feet, the smallest quarterly total since 2018. More than 56% of new construction is pre-leased.
Venture capital funding totaled $8.4 billion in Q4, slightly below Q3 but 32% higher than Q4 2024. The second half of 2025 marked the strongest six-month period for VC financing since 2022, boosting annual 2025 funding to its highest level since 2022. Employment growth remains moderate, though biotech R&D hiring accelerated for the second consecutive month in November 2025, highlighting selective sector demand, the report said.
Source: GlobeSt/ALM