The US life sciences real estate market continues to be oversupplied, but improved financing conditions and a significantly reduced construction pipeline are gradually paving the way for a recovery. This is according to an analysis by Cushman & Wakefield. Average asking rents for US life sciences facilities stood at $64.17 per square foot in the second quarter of 2026, representing a 5.3 per cent decrease year-on-year. The vacancy rate simultaneously rose by almost 200 basis points to 24.3 per cent.
Cushman & Wakefield expects market rents, particularly in regions with a high density of supply, to continue to soften. Nevertheless, stronger financing and tenant demand could stabilise rates within the next 18 to 24 months. The inventory of life sciences real estate has grown from 171 million square feet in 2021 to 239 million square feet today. However, the current construction pipeline now accounts for only 2 per cent of the existing stock, a significant drop from the peak of 17 per cent in mid-2023.
Reduced Construction Activity and Reviving Capital Markets
In the first half of this year, only 1.2 million square feet were completed, an 82 per cent decrease compared to the first half of 2025. Future developments are increasingly focusing on pre-let and built-to-suit projects. Capital markets are also gradually reopening. Investment sales for research and development (R&D) amounted to over $9.3 billion in the four quarters leading up to June, a 4 per cent increase year-on-year. The number of transactions rose by 9 per cent to 292, above the ten-year average, although the average transaction size decreased by 5 per cent.
Globally, venture capital investment reached $29.9 billion in the first half of 2026, a 30 per cent increase year-on-year and the strongest half-year result since 2022. North America accounted for $17.9 billion, a 35 per cent increase. IPO volume almost tripled to $6.8 billion, while global merger and acquisition activity reached $97.2 billion, nearly triple the previous year's value.
Regional Market Differences
San Diego County remains one of North America's largest life sciences centres, with 26.6 million square feet of stock and average asking rents of $67.09 per square foot. However, after a wave of development, the vacancy rate reached 26.9 per cent. Another 1.3 million square feet were still under construction at mid-year, of which approximately 70 per cent were pre-let. The market in Los Angeles and Orange County shows different dynamics, with only 3.6 per cent vacancy and average asking rents of $33.32 per square foot.
- —Cushman & Wakefield notes that the region's ageing industrial, flex, and office stock offers potential for conversions.
- —Emergent clusters are forming in El Segundo, Thousand Oaks, Pasadena, and LA's Westside.
- —New concentrations are also observable in Irvine and Tustin in Orange County.
Cushman & Wakefield concludes that the market is moving from a correction phase to a stabilisation phase. Capital is flowing back into the underlying industry, speculative construction activity is subdued, and investment sales are recovering. However, as vacancy rates in key hubs remain historically high, valuations continue to depend on tenant creditworthiness, lease terms, and existing occupancy, rather than on broad sector euphoria.
