Alexandria Real Estate Equities, a Real Estate Investment Trust (REIT) active in the life sciences sector, is showing signs of recovery. In the second quarter of 2026, leasing activities increased, which is considered a promising signal after several quarters of declining fundamentals. Although the REIT reported decreased balance sheet performance on Tuesday, with net income of US$73.7 million in the second quarter of 2026 compared to US$109.6 million in the same period last year, the positive development in leasing activity outweighs this.
Funds from Operations (FFO) amounted to US$296.1 million, which was more than US$100 million below the figure for the second quarter of 2025 and also represents a similar decline compared to the US$396.4 million reported in the first quarter of 2026. Revenue fell from US$762 million in the second quarter of the previous year to US$662.7 million in the same period in 2026.
Optimism despite balance sheet decline
Joel Marcus, Executive Chairman and founder of Alexandria, expressed more optimism than in previous quarters. He emphasised that the scientific sectors are improving economically, even if this progress is not yet fully reflected in the real estate sector. Marcus stated in a conversation that the company is completing an above-average number of transactions. He highlighted the highly diversified and strong tenant base. Very strong leasing in the second quarter in the life science products, services, and equipment sector is an indicator of the industry's momentum and accounts for almost 40 per cent of total leasing volume.
Alexandria leased 1 million square feet in the second quarter of 2026, compared to approximately 647,300 square feet in the first quarter. Approximately 329,000 square feet of this was attributable to deals that re-leased newly vacated space. In previous quarters, Alexandria executives made dispositions to support the company financially while the life sciences market recovers. The company sold assets worth US$170.3 million, including the properties 3825 and 3875 Fabian Way in Palo Alto, California, for US$163 million in mid-July.
Strategic development and market outlook
Alexandria is currently developing or renovating 1.4 million square feet of life science space and expects further balance sheet stabilisation by 2028. The company had liquidity of US$3.6 billion at the end of the second quarter of 2026. Much of the difficulties the REIT experienced were attributed to a massive influx of new space after developers sought to bypass difficulties in the office and retail sectors during the pandemic. Marcus also attributed the decline to a lack of support for scientific research from the Trump administration, which manifested in funding cuts for the biotechnology sector.
Colliers predicted in March that the remainder of 2026 would be favourable for the life sciences industry, as investments in weight-loss drugs such as GLP-1s boosted demand. However, there has been an influx of investment into underperforming life science properties, although a repurposing of these assets for residential or other uses is unlikely, as the Commercial Observer reported in June.
