BOSTON— A surge in life sciences development across the United States—led by dominant hubs such as Boston-Cambridge and the San Francisco Bay Area—has created a significant supply-demand imbalance, according to a new report from Savills.
The report highlights a dramatic expansion of laboratory space during and after the COVID-19 pandemic, driven by record levels of investment and urgent demand for biotech research facilities. Between 2020 and 2025, nearly 60 million square feet of life sciences space was delivered across 11 major U.S. markets tracked by Savills. Annual deliveries more than tripled during that period, rising from approximately 4.5 million square feet in 2020 to 14.5 million square feet in 2025.
However, much of that new supply is now entering a softened market.
Vacancy Surges as Demand Slows
According to the report, 55.6% of newly delivered life sciences space remains unoccupied, reflecting a sharp slowdown in tenant demand. In 2025 alone, about 73.4% of the 14.5 million square feet delivered remains vacant. Similar trends were observed in 2024, with roughly 55% of new space still unleased.
The slowdown is attributed to multiple factors, including declining venture capital funding compared to pandemic-era highs, rising costs tied to tariffs affecting drug pricing, and reduced federal funding. As capital becomes more constrained, many biotech companies are delaying expansion plans or scaling back research activity.
This shift has left landlords competing aggressively for a smaller pool of tenants, often relying on concessions and flexible lease terms to attract occupants.
Major Hubs Dominate Development
Despite the nationwide expansion, development remains heavily concentrated in established life sciences clusters. Boston-Cambridge and the San Francisco Bay Area alone accounted for approximately 33.7 million square feet of new deliveries between 2020 and 2025—about 58% of the national total.
Secondary markets such as Raleigh-Durham, Chicago, and Seattle have also seen notable growth, though at a smaller scale.
Speculative Development Backfires
Much of today’s vacancy stems from speculative construction launched during the pandemic, when demand for lab space far outpaced supply. Developers rushed to build without securing tenants in advance, expecting continued rapid growth in the biotech sector.
That strategy has led to a growing number of fully vacant buildings. Since 2023, 34 life sciences properties have been completed without a single tenant, underscoring the magnitude of the current oversupply.
In Massachusetts, one prominent example is 74 Middlesex Avenue in Somerville, a 465,000-square-foot lab building delivered in early 2025 that remains entirely vacant. Similar cases exist nationwide, including large-scale developments in San Diego and the Bay Area.
Some projects have been delayed, repurposed for alternative uses such as office or residential, or abandoned altogether.
Signs of Strength Amid the Downturn
Despite current challenges, the report emphasizes that the long-term outlook for the life sciences sector remains strong. Scientific advancements in areas such as mRNA therapeutics, gene editing, and AI-driven drug discovery continue to drive innovation and create new demand.
Additionally, the expansion of lab infrastructure may ultimately benefit the industry by improving access to space—particularly for early-stage companies that previously struggled to secure facilities in competitive markets.
Well-capitalized tenants are also taking advantage of current conditions, upgrading to newer, high-quality spaces at more favorable lease terms.
A Market Reset Underway
Savills characterizes the current environment as a “post-boom recalibration,” where elevated vacancy is part of a broader market correction following an فترة of rapid expansion.
While the near-term outlook may remain challenging, the substantial pipeline of newly built, high-quality lab space is expected to support future growth as market conditions stabilize and demand rebounds.
For now, the life sciences real estate sector is entering a transitional phase—marked by oversupply, increased competition, and evolving tenant dynamics—before the next cycle of growth begins.
