Dallas – February 5, 2025 – The U.S. life sciences real estate market posted positive net absorption in the fourth quarter even as robust construction completions raised the sector’s vacancy rate to 19.7%, according
CBRE’s new
quarterly figures report.
The Q4 numbers indicate gradual improvement across the 13 largest U.S. life sciences markets and the potential for that momentum to carry through to this year. Leasing activity for lab space totaled 3.4 million sq. ft. in Q4, up 28% from a year earlier. The positive net absorption of 920,000 sq. ft. in Q4 – the difference between newly leased space and newly vacated space – is the third gain in the past five quarters.
The sector benefitted last year from record-high life sciences employment in the U.S., a number of new drugs receiving federal approval and a 19% year-over-year increase in venture capital funding for life sciences companies to $30.4 billion. Meanwhile, the primary factor boosting the national vacancy rate – a surge in lab construction that began during the pandemic – now is easing as construction completions deplete the construction pipeline. The 12.1 million sq. ft. of labs in progress at the end of Q4 is roughly two thirds less than at the peak in 2024.
Q4 Market Performance
On the market level, 10 of the 13 largest U.S. life sciences markets registered positive net absorption in Q4, led by the San Francisco Bay Area and San Diego.
2025 Outlook
Meanwhile, another new life sciences report – CBRE’s 2025 U.S. Life Sciences Outlook – provides a look ahead. CBRE expects many of these same factors that benefited the sector in Q4 to contribute to the sector’s growth in 2025. The 2025 Outlook report highlights five trends that will be good for life sciences real estate this year, including the improving U.S. economy, strong sector employment and slightly more welcoming capital markets.
The outlook report also outlines concerns for the industry in 2025, led by a declining but still significant sum of lab space – roughly 8 million sq. ft. – forecast for construction completion this year. That will contribute to higher vacancy, especially in leading markets Boston, the San Francisco Bay Area and San Diego.
“The life sciences sector operates on longer cycles than the real estate sector, especially since drug discovery, development and marketing can take more than a decade in some cases,” said Matt Gardner, CBRE’s Americas Life Sciences Leader. “But shorter-term, economic influences come into play, too. Several economic and financial indicators point to better conditions for life sciences real estate this year.”
To read the Q4 Life Sciences Figures report, click here.
To read the 2025 U.S. Life Sciences Outlook, click here.
