JLL: U.S. Life Sciences Lab Availability Contracts for First Time in Years as Tenant Demand Grows

CHICAGO, June 9, 2026 — U.S. life sciences lab real estate has reached what JLL is calling a turning point, with lab availability contracting for the first time in years after four years of market turbulence. JLL's 2026 U.S. Lab Property Report, released Monday, shows that available lab space has dropped by approximately 2 million square feet since mid-2025 — including the largest quarterly decline in a decade — signaling the market has bottomed out and begun a recovery.

JLL cautioned that the path to equilibrium remains long, with substantial oversupply persisting and rental rates expected to face continued downward pressure through the end of the decade.

Lab Availability Contracts as Flight-to-Quality Accelerates

The contraction in lab availability is not uniform across the market. According to JLL's report, buildings completed since the beginning of 2020 have shed 2.6 million square feet of availability over the last nine months, while pre-2000 inventory has added 700,000 square feet back to the market. The dynamic reflects an accelerating flight-to-quality trend, with tenants aggressively trading up to newer, higher-quality buildings while older assets face mounting headwinds.

"After years of oversupply weighing on the sector, we're finally seeing clear signs that the worst is behind us," said Travis McCready, Head of Life Sciences, Americas Markets and Chair of JLL's Global Life Sciences Advisory Board. "The fundamentals are improving; equity markets are receptive to biotech, capital is flowing back into the sector and tenant activity is translating into real momentum. Additionally, regulatory concerns have eased considerably since this time last year. The market's defining challenge is no longer demand — it is supply."

A notable emerging trend identified in the report is the growing presence of AI, robotics and "tough tech" companies occupying lab buildings. In Boston, these alternative users now account for 30% of lab leases in 2025, triple the share from four years earlier, according to JLL.

Top Four Markets Thrive While Secondary Markets Struggle

The recovery is proving highly uneven across geographies. Boston, the Bay Area, San Diego and Raleigh-Durham have seen combined demand surge 44% year-over-year to nearly 8 million square feet in the first quarter of 2026, driven by improved biotech funding conditions and biomanufacturing reshoring. The Bay Area's AI boom and Raleigh-Durham's biomanufacturing expansion together account for 1.9 million square feet of space leaving the market since July 2025.

Secondary markets, by contrast, continue to weaken. Demand in those locations has fallen by nearly 3 million square feet over the past three years while available space has increased by 4.4 million square feet, according to JLL's data.

"The top three markets have established a new, higher leasing baseline that's 35% above pre-pandemic levels, averaging 75 deals per quarter over the past two years," said Mark Bruso, Senior Director of Boston and National Life Sciences Research at JLL. "As early-stage companies continue activating their real estate strategies, we expect this floor to rise even higher. The winners in this cycle will be the highest-quality assets in the strong locations while everything else could face headwinds over the next two years."

Tenants Hold Unprecedented Negotiating Power as Landlords Offer Record Concessions

Conditions across the top markets remain heavily tenant-favorable. Vacancy across Boston, San Diego and the San Francisco Bay Area has collectively reached 32%, giving tenants unprecedented negotiating leverage. Average lease terms for direct relocations have compressed to 62 months — 30% shorter than at market peak — while landlords are delivering record amounts of free rent and move-in-ready space to compete for every deal.

"Landlords in nearly every market must continue reductions in first-year rents and offer unprecedented concessions within the lease term," said Maddie Holmes, Senior Analyst for Life Sciences Industry Research and Advisory at JLL. "The market has never been more tenant-favorable, and these pressures won't ease for several years. It would take three times the space uptake we saw annually during the last cycle's peak to return to equilibrium."

The broader supply picture remains challenging. Over 6.2 million square feet of lab space has already transitioned out of inventory and into other asset classes. The U.S. lab market currently totals more than 200 million square feet, with a supply-to-demand ratio near 6:1, ensuring rental rates will face downward pressure for the foreseeable future, according to JLL.

Industry Optimism Is Beginning to Translate Into Real Estate Momentum

Despite the persistent oversupply, JLL's report points to a foundation forming for the next growth cycle. Early-stage companies are activating real estate plans, capital is flowing back into biotech, and the emergence of tough tech tenants is reshaping demand patterns across top-tier markets.

"Industry optimism is beginning to translate into real estate momentum, modestly, but unmistakably," said Kevin Wayer, Division President, Global – Life Sciences for Work Dynamics at JLL. "Patient investors who can navigate current market conditions will find attractive opportunities to acquire and reposition high-potential lab spaces. The next 12 months hold promise of incremental growth. When the next growth cycle starts, those who remain will be exceptionally well positioned to ride the next wave of innovation."

JLL's Life Sciences team comprises more than 3,000 professionals serving biotechnology, pharmaceutical, medical device organizations, investors and developers across lab and manufacturing environments.

Sources

JLL: U.S. Life Sciences Real Estate Has Reached Its Turning Point (June 9, 2026)