Dallas, TX
Increase in Lab Vacancy in Q1 Opens More Options for Life Sciences Companies
Life sciences employment and average rental rates are up, while venture capital is down in first quarter
April 26, 2023
Media Contact
Corporate Communications
Lab vacancy increased across the top 13 U.S. life sciences markets in the first quarter, providing relief for companies that had found little available space in recent years, according to a new report from CBRE.
Average vacancy of 6.7% in the first quarter marked an increase of 170 basis points from a year earlier. That compares to an average of 7.7% in the first quarter of 2020, before the pandemic sparked a wave of activity in the life sciences sector. The low point for vacancy - 4.6% - came in the second quarter of 2022.
Other measures differed in the first quarter, indicating a sector cooling to red hot from white hot. Despite announcements of layoffs, U.S. life sciences employment increased by 3.5% in February from a year earlier, exceeding the overall job-growth rate of 2.9%. Average rental rates increased by 3.2% from the fourth quarter to a record $65.62 per sq. ft. in the first.
Meanwhile, venture capital funding for life sciences companies declined in the first quarter from the fourth amid banking sector turmoil, which constrained capital availability for the tech and life sciences industries. Venture capital investment in life sciences now is on-par with 2019 levels.
Developers had more than 40 million sq. ft. of lab space under construction in the 13 markets in the first quarter, with 25% of it preleased.
“Most measures of the life sciences market remain at or above pre-pandemic levels, demonstrating that this is a market buttressed by demand,” said Matt Gardner, CBRE Americas Life Sciences Leader. “There is a lot of promising science in the pipeline, and the sector likely will regain momentum once the lending market recovers. Meanwhile, companies of all sizes are likely to find at least a few available spaces in markets where there previously was little or no such availability.”
Top Life Sciences Markets: Select Q1 Stats
| Market | Market Size* | Vacancy | Sq. Ft. Under Construction | Sq. Ft. of Current Tenant Demand |
| Boston/Cambridge | 54.4M | 3.4% | 16.5M | 2.4M |
| Chicago | 2M | 28% | 764,963 | 1.3M |
| Denver/Boulder | 2.9M | 6% | 458,864 | 570,000 |
| Houston | 1.9M | 23.2% | 618,000 | 70,000 |
| Los Angeles | 6.2M | 12.8% | 439,287 | 811,500 |
| New Jersey | 16M | 8.3% | - | 440,000 |
| New York City | 2.9M | 8.2% | 861,108 | 713,000 |
| Philadelphia | 10.4M | 11.6% | 2.4M | 2.1M |
| Raleigh-Durham | 9M | 7.4% | 679,994 | 471,757 |
| San Diego | 24.2M | 5.6% | 5.3M | 1.5M |
| San Francisco Bay Area | 33.1M | 8.4% | 9.4M | 2.8M |
| Seattle | 8.6M | 7.5% | 1.3M | 535,000 |
| Washingtom D.C./Baltimore | 12.7M | 2.6% | 1.6M | 894,000 |
*In square footage of existing lab space.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2024 revenue). The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.