Life sciences real estate sector reaches a turning point

After four years of unprecedented market turbulence, U.S. life sciences real estate sector supply is finally contracting with demand growing across top markets, according to JLL’s 2026 U.S. Lab Property Report.

Lab availability has dropped by about two million sf since mid-2025, which included the largest quarterly decline in a decade. This indicates that the market has bottomed out and begun to recover. 

But the path forward remains long, with substantial oversupply persisting and rental rates facing continued downward pressure through the end of the decade, the report says. Buildings completed since 2020 have shed 2.6 million sf of availability in nine months as tenants aggressively trade up to newer, higher-quality space.

Demand in top markets Boston, the Bay Area, San Diego and Raleigh-Durham surged 44% year-over-year, while secondary markets have lost nearly 3 million sf of demand over three years. AI, robotics, and medtech companies now account for 30% of Boston lab leases, which is triple the share from 2021.

Demand is uneven across geographies. Boston, the Bay Area, San Diego, and Raleigh-Durham have seen combined demand surge 44% year-over-year to nearly eight million sf in Q1 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 sf of space leaving the market since July 2025.