Life Sciences Real Estate: Navigating a Market Reset

The life sciences real estate sector is experiencing a significant transformation, marked by rising vacancy rates and shifting tenant demands. In the first quarter of 2026, the aggregate vacancy rate for life sciences properties reached 27.4%, up from 25.7% in the same period of 2025, with major markets like Boston and the Bay Area reporting rates exceeding 30%. This increase is largely attributed to a combination of a funding downturn from the National Institutes of Health (NIH) and an oversupply of lab space following a construction boom during the pandemic.

Biotech's Outlook Brightens, But Lab Landlords Face Deepening Vacancies, Falling Rents

The downturn in demand is compounded by a fundamental shift in how life sciences companies utilize real estate. Travis McCready, head of industries leasing advisory at JLL, noted that the integration of artificial intelligence (AI) and robotics is altering the requirements for lab spaces. As companies adapt to these technologies, they are reevaluating their existing facilities, leading to a significant amount of lab space becoming available for alternative uses. JLL forecasts that approximately 19 million square feet of lab space may transition to other uses by 2030.

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Gensler, the largest architectural firm globally, has identified that the introduction of AI and automation is reshaping lab operations and real estate strategies. Ryley Poblete, Gensler's global sciences practice area leader, emphasized that the traditional lab setup is evolving, with a shift from wet bench areas to spaces that accommodate advanced technologies. This transformation necessitates a redesign of existing facilities to support the infrastructure required for AI and robotics, including increased power and air needs.

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Despite the high vacancy rates, there are signs of optimism within the life sciences sector. Venture capital investment in life sciences reached $7.5 billion in Q1 2026, signaling potential growth. However, landlords face challenges as tenants become more selective, favoring high-quality, move-in-ready lab environments over speculative spaces. The Denver-Boulder market, for instance, reported a direct vacancy rate of 20.5%, with tenants increasingly holding out for fully serviced spaces.

Denver-Boulder Life Sciences Vacancy Climbs in Q1 2026

Critics point out that while there is optimism regarding funding and stock prices, this has not yet translated into improved conditions for life sciences real estate. Mark Bruso, JLL's National Life Sciences Research Director, highlighted the disconnect between industry optimism and real estate performance, noting that landlords are struggling with a supply-demand imbalance.

Biotech's Outlook Brightens, But Lab Landlords Face Deepening Vacancies, Falling Rents

• “This entire story and this entire narrative is evolving in real time,” — Travis McCready, JLL

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• “Where we're going with science, especially with these new tools of automation and AI, is completely changing the way we think about how you would do process.” — Ryley Poblete, Gensler

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• “The reality is that we're sort of coming out of that proverbial rainy day, hopefully, but we’re not quite sure when the funding environment frees up more, so continue the sort of cautious paradigm about not taking the brakes fully off,” — Matt Gardner, CBRE

Biotech's Outlook Brightens, But Lab Landlords Face Deepening Vacancies, Falling Rents

As the life sciences real estate market navigates this reset, the focus will likely shift towards the quality and readiness of lab spaces rather than sheer availability. The ongoing integration of advanced technologies and the evolving needs of tenants will dictate the future landscape of this sector, with landlords who can adapt to these changes positioned to succeed in a competitive environment.

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