After several years of big swings in demand, the U.S. life sciences CRE sector is showing signs of stabilization, according to the latest research from JLL.
In its recently released 2026 U.S. Lab Property Report, JLL reported that tenant demand for laboratory space is beginning to outpace new supply in the nation’s busiest life sciences markets. This is welcome news to landlords and investors who have weathered a prolonged downturn in this sector marked by oversupply and declining rents.
The JLL report found that U.S. lab availability has fallen by roughly 2 million square feet since mid-2025. While this doesn’t mean that the sector’s challenges are over, it does suggest that the life sciences market might have reached its bottom and is now entering the early stages of recovery.
“After years of oversupply weighing on the sector, we’re finally seeing clear signs that the worst is behind us,” said Travis McCready, head of life sciences, Americas markets, and chair of JLL’s global life sciences advisory board, in a written statement.
McCready said improving biotech funding conditions, stronger capital flows and increased tenant activity are combining to help fuel momentum in the life sciences sector. That’s a positive. On the downside? The industry continues to grapple with a significant supply imbalance.
JLL’s report also highlights a shift in the type of life sciences space that tenants want. Companies are increasingly seeking out newer, higher-quality lab buildings while older properties struggle to attract new tenants.
JLL said that buildings completed since the start of 2020 have absorbed 2.6 million square feet of available space during the last nine months. During the same period, laboratory properties built before 2000 have seen their available space increase by 700,000 square feet.
The report also highlights the emergence of a new tenant base. Artificial intelligence, robotics and other “tough tech” companies are increasingly leasing laboratory space traditionally occupied by biotechnology firms. In Boston, for example, these alternative users accounted for 30% of lab leases signed in 2025, triple their share from four years earlier, JLL reported.
Despite all this good news, the recovery in this sector is not occurring evenly across the country. JLL found that Boston, the San Francisco Bay Area, San Diego and Raleigh-Durham continue to dominate the sector. Combined demand in those four markets increased 44% year-over-year to nearly 8 million square feet in the first quarter of 2026.
Secondary markets, though, are not always thriving. Over the last three years, tenant demand in these locations has fallen by nearly 3 million square feet while available inventory has increased by 4.4 million square feet, according to JLL.
“The winners in this cycle will be the highest-quality assets in the strong locations,” said Mark Bruso, senior director of Boston and national life sciences research at JLL, in a statement.
Even in the strongest markets, tenants currently hold considerable leverage. Vacancy rates across Boston, San Diego and the Bay Area have reached 32%, prompting landlords to offer shorter lease terms, larger rent concessions and move-in-ready space packages to attract occupiers.
JLL estimates that the country’s lab market now totals more than 200 million square feet and faces a supply-to-demand ratio approaching 6-to-1. That imbalance is expected to keep downward pressure on rents for years.
