Life Sciences Construction Boom Creates Supply Glut, but Long-Term Growth Outlook Remains Strong

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A surge in life sciences development across the United States, led by dominant hubs like Boston-Cambridge and the San Francisco Bay Area, has created a significant supply-demand imbalance, according to a new report from Savills. Between 2020 and 2025, nearly 60 million square feet of new lab space was delivered, but 55.6% of it remains unoccupied as tenant demand has slowed due to factors like declining venture capital funding and reduced federal funding. The oversupply is particularly acute in 2025, with 73.4% of the 14.5 million square feet delivered that year still vacant. However, the long-term outlook for the life sciences sector remains strong, with continued scientific advancements driving innovation and future growth.

Why it matters

The life sciences real estate boom during the pandemic has led to a significant oversupply of lab space, particularly in major hubs like Boston and the Bay Area. This has created challenges for landlords and developers as they compete for a smaller pool of tenants, but also presents opportunities for well-capitalized companies to upgrade to newer, higher-quality facilities at more favorable lease terms. While the near-term outlook may remain challenging, the substantial pipeline of newly built lab space is expected to support future growth as market conditions stabilize and demand rebounds.

The details

The report highlights that between 2020 and 2025, nearly 60 million square feet of life sciences space was delivered across 11 major U.S. markets tracked by Savills. Annual deliveries more than tripled during that period, rising from approximately 4.5 million square feet in 2020 to 14.5 million square feet in 2025. However, 55.6% of this newly delivered space remains unoccupied, reflecting a sharp slowdown in tenant demand. In 2025 alone, about 73.4% of the 14.5 million square feet delivered remains vacant. Similar trends were observed in 2024, with roughly 55% of new space still unleased. The slowdown is attributed to multiple factors, including declining venture capital funding compared to pandemic-era highs, rising costs tied to tariffs affecting drug pricing, and reduced federal funding.

• Between 2020 and 2025, nearly 60 million square feet of life sciences space was delivered across 11 major U.S. markets.
• Annual deliveries more than tripled during that period, rising from approximately 4.5 million square feet in 2020 to 14.5 million square feet in 2025.
• In 2025 alone, about 73.4% of the 14.5 million square feet delivered remains vacant.
• In 2024, roughly 55% of new space still remained unleased.

What’s next

The report emphasizes that the long-term outlook for the life sciences sector remains strong, as scientific advancements continue to drive innovation and create new demand. Well-capitalized tenants are also taking advantage of current conditions to upgrade to newer, high-quality spaces at more favorable lease terms. The life sciences real estate sector is entering a transitional phase, marked by oversupply and increased competition, before the next cycle of growth begins.