What’s in a lab these days? More desks than test tubes, apparently. Life-sciences buildings, once seen as a pandemic-proof investment, are now facing a serious case of overexposure thanks to a surplus of properties and declining demand. Developers in areas like Boston are starting to market these properties for office use, with some anticipating rent reductions of around 30%.

• Since Q1 2020, over 59M sq. ft. of new life-science space has been added in the US, with Boston, San Diego, and the Bay Area seeing a huge influx of new buildings.
• But by Q2 2024, vacancy rates for life-science properties surged to 23.8%, up from less than 9.5% in Q1 2019.

Microscopic demand: In the post-pandemic period, biotech startups and firms have slowed their expansion, unable to afford the high costs of advanced facilities. This, combined with rising interest rates and diminished venture capital funding, has significantly cooled the market — leading to higher vacancies and lower rents. JLL’s Travis McCready warned, “We cannot withstand this level of supply-demand imbalance for too long. At some point, the arithmetic just doesn’t work” (WSJ).