Chapter 9
Outlook
2023 U.S. Life Sciences Outlook
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Outlook for 2023
- Previous cycles show that any slowdown in life sciences employment likely won’t be as severe as that of the broader economy. An uptick in venture funding in Q4 2022 was a hopeful sign for employment stabilization later this year since employment changes generally mirror funding changes after a two-quarter lag. However, recent turmoil in the banking sector could cause quarterly reductions in funding this year.
- The capital markets outlook is mixed. While venture capital funding and initial public stock offerings for life sciences companies decreased in 2022 and challenges remain, record levels of NIH funding and R&D expenditures by the industry will fuel continued growth.
- With ample cash and equivalents on the balance sheets of U.S. life sciences companies, another strong year of M&A activity and other business development transactions is expected in 2023.
- After a surge in life sciences lab/R&D investment sales in 2021, cap rates for these assets are beginning to stabilize and should remain favorable compared with other property types.
- While lab/R&D vacancy rates in the top U.S. life sciences markets have begun to rise, above-average and steady demand will underpin the sector’s resilience in the year ahead.
History suggests that the life sciences industry is better positioned than many others to weather an economic recession this year.

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