Life Sciences to Normalize in 2026 After Post-Pandemic Saturation: Report
By Mark Hallum March 13, 2026 1:06 pm
reprints
The country’s life sciences real estate sector will likely continue to see staggered binary fission as investors pull back and vacancies remain high.
But, in a way, the asset class will be normalizing from a period of hyperactive proliferation of lab space following the pandemic, when developers built like crazy on the expectation that it would be one of the few channels for making money in commercial real estate, considering office and retail were in hibernation, according to a new report from Colliers.
Landlords and tenants alike, however, will still be grappling with volatile performance on the stock market and reduced funding from the private sector and Washington, D.C., leading to layoffs.
The one saving grace in 2026 could be a growing demand for weight-loss therapy drugs like GLP-1, the active ingredient behind Ozempic and other medications.
Venture capital funding in life sciences was more conservative in 2025, with only about $33 billion invested, representing around 25 percent below where it averaged from 2020 to 2022, according to Colliers’ 2026 Life Sciences Market Outlook.
Vacancies in major markets like Boston continue to grow, too, as Beantown had about 16 million square feet of available space at the end of 2025, with Philadelphia standing out to Colliers researchers as well.
This was the case despite Biogen’s 585,000-square-foot lease in Cambridge, Mass., at BioMed Realty’s 75 Broadway, a new development that won’t do any favors to the availability rate, and Merck’s new $1 billion, 225,000-square-foot facility in Wilmington, Del., which is expected to impact market fundamentals across the region.
In New York City, deal sizes remain small, with the largest lease being a 46,000-square-foot expansion in November for BioLabs@NYU Langone at 45-18 Court Square in Long Island City, Queens.
Other deals in the five boroughs remained below 25,000 square feet in 2025, ultimately leading to the New York City Economic Development Corporation’s October decision to drop its search for an anchor tenant for the $1.6 billion life sciences campus known as SPARC Kips Bay.
The narrative seems to flow with the experience of the executives at Alexandria Real Estate Equities, the nation’s largest owner of life sciences real estate, which for the last few quarters has bemoaned the saturated state of the life sciences sector. The company’s executives claimed the situation was only made worse by decreased funding for scientific research from the Trump administration.
The wider implications of a suppressed market for advances in medicine wasn’t lost on Joel Marcus, Alexandria’s founder and executive chairman, in his January remarks during a fourth-quarter earnings call.
“In 2025, we witnessed the fifth year of a life science bear market,” Marcus told investors. “Our timeline clearly evidences that no one could have predicted the February 2025 nomination of [U.S. Health and Human Services Secretary Robert F. Kennedy Jr.], the intense cascade of events from that point on, and, in fact, sadly, measles and polio might be back to some extent.”
Alexandria is planning to offload $581.7 million in underperforming assets in key markets throughout 2026.
Mark Hallum can be reached at mhallum@commercialobserver.com.
