U.S. Life Sciences Office Market Shows Signs of Rebound Amid Growing Biotech Employment

The US life sciences market is returning to growth. The laboratory office space market is showing early signs of recovery with recent employment numbers in biotech research and pharmaceutical manufacturing increasing by 1.7% year-over-year through April 2026, the greatest increase since 2023.

Venture capital investments in life sciences this year have increased 33% compared to H1 2025 and are currently higher than the last two years. Some of the biggest increases in venture capital funding have come from life sciences hubs like San Francisco, Miami, and Austin, among others.

Boston remains the number one life sciences hub, with the Bay Area ranking second, Washington, D.C. third, and the New York/New Jersey area ranking fourth. But other markets have moved up in the CBRE annual rankings, notably Raleigh-Durham and Denver/Boulder. It will be worth keeping an eye on these secondary hubs, as the sectors growth could translate into more affordable lab space and rental rates.

But don’t get too excited. High vacancy rates for life science spaces across 13 of the largest markets in the country – averaging 23.2% vacancy for lab and office space in Q1 2026 – suggests that it will take time to whittle down the over supply of lab space created by the post pandemic building boom. And then there is AI – and how it will impact the amount of physical space researchers will need to complete their work. The lines of influence are unknown at this point.

Biotech and pharma expansion together with demand from other sectors such as clean energy and advanced manufacturing of deep tech products should gradually start to absorb excess of lab inventory. We will continue to monitor demand generated by these industries in order to project trends in life sciences office space.

What This Means for Your Portfolio:

1. Secondary hubs in the life sciences such as Raleigh-Durham, Denver are areas for your consideration as life sciences grow quickly and there will be lab space of various types at reasonable rents in these markets.
2. Vacancy rate in the life sciences lab markets under investigation is high (23.2% in 13 major life sciences lab markets in Q1’26) and therefore should be monitored closely. As vacancy rate in life sciences markets has only slightly decreased from record high of 23.3% in 2025, its gradual decrease instead of sudden increase should be anticipated.
3. Follow the life sciences VC funding in order to anticipate future peaks in demand for lab space, especially in the cities that are experiencing sharp increases in funding, i.e. Miami and Austin.
4. Also look into deep tech manufacturing facilities (like deep tech in advanced materials, clean tech for bio-energy, clean tech for renewable energy, and the like), as they should benefit from the ‘spillover’ demand for the life sciences industry, or its ripple effect.

A Fresh Angle on Recovery:

The life sciences office market recovery is not about simply returning to full labs. Rather, the technology and other industries that surround the life sciences will begin to dictate what types of specialized facilities will be needed in the future. As a result, it is not sufficient to simply examine current vacancy rates. Instead, investors will need to begin to explore and understand how space will be affected by the changing function of the lab as well as by new design and technologies, not least of all by the impact of AI.