For U.S. Life Sciences Real Estate, 2026 Is a Tale of Stabilization
The pipeline of new space in an oversupplied market is finally drying up as venture capital investment reaches its highest level in four years
By Greg Cornfield August 26, 2026 4:40 pm
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The U.S. life sciences real estate market remains oversupplied, but improving funding conditions and a sharply reduced construction pipeline are beginning to set the stage for a recovery, according to Cushman & Wakefield.
Asking rents at U.S. life sciences facilities averaged $64.17 per square foot in the second quarter of 2026, down 5.3 percent compared to last year, and vacancy climbed nearly 200 basis points to 24.3 percent. Cushman & Wakefield expects market rents to continue to slip, particularly in heavily supplied regions, but said stronger funding and occupier demand could stabilize rates over the next 18 to 24 months.
Life sciences inventory has expanded from 171 million square feet in 2021 to 239 million square feet today, but the construction pipeline now represents only 2 percent of inventory, down from 17 percent at its mid-2023 peak. Just 1.2 million square feet was delivered through the first half of this year, which is an 82 percent decline from the first half of 2025, with future development increasingly concentrated in pre-leased and build-to-suit projects.
Capital markets are also gradually reopening. R&D investment sales totaled more than $9.3 billion during the four quarters ending in June, up 4 percent from a year earlier.
Deal count rose 9 percent to 292, above the prior 10-year average, although average transaction size declined 5 percent.
Globally, venture capital investment reached $29.9 billion in the first half of 2026, up 30 percent from last year, and the strongest first-half showing since 2022. North America accounted for $17.9 billion, up 35 percent. IPO volume nearly tripled to $6.8 billion, while global mergers and acquisitions activity reached $97.2 billion, nearly three times its level a year earlier.
San Diego County remains one of North America’s largest life sciences hubs, with 26.6 million square feet of inventory and asking rents averaging $67.09 per square foot. But vacancy has reached 26.9 percent after a development surge. Another 1.3 million square feet remained under construction at midyear, although roughly 70 percent was pre-leased.
The Los Angeles and Orange County market present a different story, with only 3.6 percent vacancy and average asking rents of $33.32 per square foot. Cushman & Wakefield said the region’s aging industrial, flex and office inventory could be a conversion pipeline, with clusters emerging in El Segundo, Thousand Oaks, Pasadena and ] L.A.’s Westside, as well as in Irvine and Tustin in Orange County.
Cushman & Wakefield points to a market moving from correction into stabilization, with capital returning to the underlying industry, muted speculative construction, and recovering investment sales. But with vacancy still historically high in major hubs, underwriting remains dependent on tenant credit, lease term and existing occupancy rather than broad sector enthusiasm.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
