Life Sciences Vacancy Near 27% for Three Biggest U.S. Hubs
Boston, the Bay Area and San Diego deal with excess lab space while VC funding slows
By Greg Cornfield October 20, 2026 2:20 pm
reprints
The nation’s largest life sciences hubs are still struggling with elevated real estate vacancy rates and a slowdown in venture capital funding.
Despite some pharmaceutical companies making big leasing commitments, Greater Boston, the San Francisco Bay Area and San Diego County have vacancies ranging from nearly 24 percent to more than 28 percent after the third quarter of 2026, according to new reports from Savills. The three markets also recorded annual declines in venture capital funding during the quarter.
Greater Boston, the largest of the three life sciences markets by inventory with 44.4 million square feet, is being weighed down by oversupply. Overall vacancy reached 28.1 percent during the third quarter, while another 3.2 million square feet is under construction.
The region’s venture capital funding totaled $2.7 billion during the third quarter, down from $3.2 billion a year earlier. Meanwhile, National Institutes of Health funding declined by about $200 million from 2025, although the Boston area continued to attract more NIH funding than either the Bay Area or San Diego.
Some pharmaceutical companies expanded their footprints in Greater Boston in the third quarter. Sanofi accounted for two of the market’s largest leases, covering 500,000 square feet at 350 Water Street and another 400,000 square feet at 450 Water Street in Cambridge. Roche‘s Genentech also opened a 95,000-square-foot center at Harvard‘s Enterprise Research Campus in Boston’s Allston neighborhood with a 10-year lease.
Also, Gillette acquired 232 A Street in Boston’s Seaport District for $99.3 million. The 325,000-square-foot development site is planned to become the company’s headquarters.
Meanwhile, the San Francisco Bay Area posted a 23.8 percent vacancy rate in its life sciences space during the third quarter, down 20 basis points from a year earlier. The market’s life sciences inventory grew slightly to 37.2 million square feet.
Venture capital investment also slowed in the Bay Area. Life sciences companies in the region raised $8.3 billion across 428 deals through the first three quarters of 2026, down 13.3 percent compared with the same period last year. Third-quarter funding totaled $2.6 billion, compared with $4.8 billion a year earlier.
Still, the Bay Area recorded one of the nation’s largest recent life sciences leasing transactions when Revolution Medicines signed for 672,000 square feet at Pacific Shores Center in Redwood City. The biotech company took space previously used by Google at 1600-1900 Seaport Boulevard. Other notable transactions included Roche‘s 67,807-square-foot lease in South San Jose, and Intuitive Surgical’s 46,849-square-foot lease in Sunnyvale.
The Bay Area’s development pipeline also tightened. Just 800,000 square feet of life sciences space was under construction during the third quarter, compared with 1.4 million square feet a year earlier.
San Diego recorded the highest vacancy rate for the three top markets, reaching 28.5 percent during the third quarter, up 60 basis points from a year earlier. The San Diego region’s life sciences inventory expanded to 27.8 million square feet from 27.3 million square feet a year earlier.
Venture capital funding declined the sharpest in San Diego among the three markets. Life sciences companies raised $1.4 billion through September, down 34.1 percent from last year and the lowest nine-month total since 2022. And third-quarter investment totaled $500 million, compared with $900 million during the same period in 2025.
On the development side, Alexandria Real Estate Equities completed a 427,000-square-foot research and development facility for Bristol Myers Squibb, the anchor tenant at the 2.9 million-square-foot Campus Point campus. However, San Diego now has almost no life sciences space under construction, compared with 600,000 square feet underway this time a year ago.
Capricor Therapeutics signed for 171,001 square feet at 9625 Towne Centre Drive, and Aspen Neuroscience signed a 48,696-square-foot lease in San Diego’s Torrey Pines neighborhood, while Exagen signed a 28,094-square-foot lease in Carlsbad.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
