More than one in four purpose‑built life‑sciences lab spaces in the ten largest markets stood vacant in early 2026, according to JLL, with Boston and the San Francisco Bay Area topping 30% vacancy. CBRE also found venture capital flows into life sciences strengthened in the second half of 2025, suggesting demand pressures may be easing. Developers, investors and governments now face a choice: buy and convert distressed lab assets or wait for slower organic absorption as the stock of new lab space continues to shrink.

What went wrong Life‑sciences lab real estate expanded rapidly for a decade on heavy public and private funding and a wave of purpose‑built facilities. Then demand fell sharply after federal grant cuts — the National Institutes of Health cancelled billions in research grants — undermining many lab users. JLL reports vacancy in the 10 biggest life‑sciences markets rose to 27.4% in Q1 2026, from 25.7% a year earlier; major hubs such as Boston and the San Francisco Bay Area are above 30% vacancy. The downturn reflected oversupply and changing operator needs driven by automation and AI. Two factors compounded the problem: - A large volume of new lab construction created excess capacity. - A fundamental change in workplace and lab workflows — more automation and robotics — reduced some space needs, according to Travis McCready, head of industries leasing advisory at JLL. Signs of stabilisation CBRE reported venture capital investment in life sciences strengthened in the second half of 2025, the strongest stretch since 2022; startups remain primary tenants for many lab buildings, so this matters for occupancy. Meanwhile, the volume of new lab space under construction has fallen to its lowest level since 2017, reducing the risk of further acute oversupply. Industry forecasters expect a gradual recovery driven more by removal of excess supply and adaptive reuse than by an immediate leasing surge. A JLL forecast published late last year projected availability would fall to roughly 20% by 2030, assuming weak absorption alongside significant exits of supply through distress sales and conversions. How property will change Owners that adapt buildings to new scientific workflows will be best placed as demand normalises. Research by Gensler into automation and robotics found changes in equipment, infrastructure and staff composition will reshape building design and return‑on‑capital calculations. Ryley Poblete, global sciences practice area leader at Gensler, described the shift as "transformative," affecting floor loading, ceiling heights, utility pits and chilled‑water capacity. Two investor opportunities have emerged: - Buy distressed specialised lab buildings at a discount and reposition them for alternative uses such as office, manufacturing, data centres or mixed‑use schemes. - Invest in the minority of assets being designed or retrofitted for automated, AI‑driven labs of the future.

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JLL projects availability could decline to about 20% by 2030, on the assumption of continued weak absorption coupled with significant supply exits through distress sales and adaptive reuse.

This article was created with AI assistance.