The life sciences real estate market is caught in a paradox. While new lab space is being built at a pace that outstrips tenant demand, companies within the sector are simultaneously pulling back, trimming costs, and growing more cautious in how they use space. According to Savills, this unusual combination is reshaping emerging and primary life sciences hubs across the United States.
It paints a picture of a market that overbuilt in expectation of booming demand that never fully materialized. In many regions, gleaming new life sciences buildings sit partially—or even completely—empty due to a slowdown in tenant leasing. “The life sciences sector mimicked the post-pandemic multifamily response,” Savills noted, “with construction outpacing tenant requirements.” But instead of a flood of new occupants, developers are now facing a growing imbalance between supply and demand.
At the same time, rising operating expenses and tighter financial conditions are prompting companies to slash budgets wherever possible. Strategies like coworking labs, downsizing square footage, and shifting headquarters to more affordable secondary markets have become increasingly common.
Raleigh-Durham and Northern New Jersey, for instance, have become hotspots for companies seeking to maximize their capital investment.
Despite these contradictions, venture capital activity has remained relatively steady. Funding totaled $20.8 billion, with emerging life sciences markets such as Chicago, Denver-Boulder, Raleigh-Durham, and Seattle showing a revival in investor confidence.
“These markets have either surpassed or are on pace to reach funding levels not seen in a couple of years,” Savills wrote.
In Boston-Cambridge, one of the nation's most mature life sciences centers, construction continues, but developers are adjusting to the new reality. Lendlease completed a 350,000-square-foot, nine-story life sciences building, yet Bulfinch Companies, originally planning a 500,000-square-foot campus, has pivoted. Due to weakening demand, the firm is now exploring alternate uses—including residential units, medical offices, and a hotel—for the site. By the end of the second quarter, the area had seen 174 deals totaling $3.8 billion in investment.
Chicago experienced a sharper slowdown, with just 24 deals totaling $640.1 million—a drop from its 2022 peak, but still outperforming 2023 and 2024. The city continues to invest in incubator space, however. Portal Innovations opened a 22,000-square-foot floor in Hyde Park Labs to host early-stage life sciences startups. Chan Zuckerberg Biohub and Portal also expanded their leases in Fulton Labs, while P33 Chicago relocated its headquarters to a new facility developed by Trammell Crow.
In New York, the life sciences sector demonstrated resilience, with $1.1 billion invested in 153 deals during Q2. Neurodevelopmental-focused GRIN Therapeutics teamed up with Angelini Pharma to bring products to market, while Cresilon continued its growth, and Rumi Scientific moved into Brooklyn’s Industry City.
Meanwhile, the New York Institute of Technology unveiled a 20,000-square-foot Biomedical Research, Innovation, and Imaging Center designed to foster the development of applied science.
Northern New Jersey, a market gaining momentum, saw 18 deals totaling $172.1 million. Portal Innovations partnered with the NJ Innovation Hub to design and manage a 30,000-square-foot lab space, and Biocentriq leased 56,845 square feet at 201 College Road East in Princeton. Consumer health giant Kenvue, formerly part of Johnson & Johnson, cut the ribbon on its new 290,000-square-foot headquarters.
Philadelphia recorded 54 deals for $330.6 million in funding. Even as Fore Biotherapeutics secured $38 million in new capital and Gov. Josh Shapiro committed $30 million in state funding for development at the Navy Yard, the city also exemplified cutbacks in the sector. Spark Therapeutics announced plans to downsize its workforce, laying off more than half of its employees.
The Raleigh-Durham area posted 51 deals valued at $674.3 million, highlighting its emergence as a key secondary hub. Genentech committed $700 million toward a new manufacturing facility, while Atsena Therapeutics successfully raised $150 million. Venture funding activity in the region remained robust.
San Diego rounded out the report with 33 deals totaling $875.8 million. Among notable transactions, Pfizer sold a five-building, 631,000-square-foot campus to BioMed Realty for $255 million. Meanwhile, developers Sterling Bay and Harrison Street contributed an additional 690,000 square feet of new space to the market.
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