Overview: A Sector Finding Its Footing
The U.S. life sciences real estate sector is entering a more measured phase of growth. According to Cushman & Wakefield’s February 2026 Life Sciences Update, vacancy holds steady, new construction slows, and capital markets activity regains momentum. Together, these trends signal a sector that is stabilizing rather than stalling.
“After several years of rapid expansion, the sector is recalibrating,” said Sandy Romero, Head of Office and Alternative Insights at Cushman & Wakefield. “With development activity now sharply reduced, the sector has the runway it needs to absorb recent deliveries and stabilize fundamentals.”
Asking Rents Soften But Stay Premium
Rents Still Command a Significant Advantage
U.S. life sciences asking rents averaged $66.16 per square foot (psf) in Q4 2025. That figure reflects a 3.1% year-over-year (YOY) decline. However, despite this modest softening, life sciences space still commands a major premium over traditional office space.
On average, life sciences rents run 40% higher across the 12 markets tracked by Cushman & Wakefield Research. Furthermore, key hubs outperform even that benchmark. In San Diego, the premium reaches 68%. In Boston, it stands at 61%. These numbers confirm that demand for specialized lab and research space remains strong in top-tier markets.
Vacancy Rates Hold Steady Nationwide
Stability Signals a Healthier Market Balance
The overall U.S. life sciences vacancy rate was 23.1% in Q4 2025. That marks a 320 basis point increase above year-ago levels. Nevertheless, the quarter brought encouraging signs. Direct vacancy edged down to 19.9% quarter-over-quarter (QOQ). Meanwhile, sublease vacancy held unchanged at 3.5% both QOQ and YOY.
This stability suggests that the market is beginning to absorb recent deliveries. In addition, the reduction in direct vacancy shows that tenants are actively occupying space rather than giving it back.
Construction Pipeline Contracts Sharply
Development Slows to a Multi-Year Low
The construction pipeline tells one of the most compelling stories in this cycle. At its 2023 peak, new development represented 17% of existing inventory. By Q4 2025, that figure had contracted to just 3%. Currently, just under 8 million square feet (msf) is underway — the lowest level since 2019.
Notably, more than half of that pipeline is already preleased. This shift reduces speculative risk considerably. Investors and developers are clearly moving away from building on spec and toward more disciplined, demand-driven strategies.
Build-to-Suit Projects Lead the Way
Preleased Development Reduces Speculative Exposure
Nearly 6 msf is expected to deliver by the end of 2026. Of that total, 63% is preleased. This reflects a broader industry shift toward build-to-suit (BTS) projects. In 2025, BTS accounted for nearly one-fourth of all total deliveries.
“The reset in development activity is one of the most significant shifts we’ve seen in this cycle,” added Romero. “A greater share of preleased and build-to-suit projects reduces speculative risk and supports more sustainable long-term growth.”
Markets with Constrained Supply Outperform
Several markets have benefited directly from disciplined development. Los Angeles–Orange County, Philadelphia, suburban Maryland, New Jersey, and Denver all maintained vacancy rates below 20%. As a result, these markets avoided the large blocks of newly delivered vacant space seen in other regions.
Capital Markets Rebound with Confidence
Investor Activity Surges in Q4 2025
Investment activity strengthened notably throughout 2025. U.S. R&D sales volume totaled $9.8 billion for the year — up 29% YOY. Moreover, the fourth quarter alone reached $3.4 billion. That represents a 51% increase QOQ and a 36% gain YOY.
Transaction counts also climbed. The number of sales deals over the trailing four quarters rose 38% YOY to 264 transactions. That figure sits slightly above the 10-year average. Furthermore, average deal size grew to $37 million, reflecting higher-value assets changing hands.
“The rebound in transaction activity, particularly in the fourth quarter, reflects improving investor confidence in life sciences real estate,” added Romero. “As pricing continues to recalibrate and capital markets conditions improve, investors remain focused on well-located, high-quality assets.”
Top Markets Drive Transaction Volume
Five Metros Dominate Sales Activity
Transaction volume remains concentrated at the top. The five leading metros account for more than 80% of 2025 activity. San Francisco led the nation in sales. Boston followed closely behind. Additionally, New York, the Southeast, and San Diego each posted notable YOY gains, signaling broadening investor interest beyond traditional hubs.
What This Means for 2026
Gradual Rebalancing on the Horizon
The life sciences real estate market now stands at a meaningful inflection point. Construction is slowing. Vacancy is holding steady. Investment activity is rising. Together, these factors position the sector for gradual rebalancing in 2026.
For occupiers, the slowdown in new supply creates an opportunity to lock in quality space before conditions tighten again. For investors, improving fundamentals and rising transaction volumes signal a more favorable entry environment. Consequently, both groups benefit from the sector’s shift toward discipline and long-term sustainability.
