Generation Park has collected nearly $9 billion in pharmaceutical manufacturing investment in under a year. Eli Lilly and Co. started construction this summer on a $6.5 billion active pharmaceutical ingredient campus spread across 236 acres of the northeast Houston district. Bristol Myers Squibb followed in August, selecting the same 4,300-acre McCord Development project for a $2.3 billion, 600,000-square-foot multi-modal campus expected to employ nearly 500.
Newmark’s tally of notable Houston lab leases for the second quarter ran to two deals. Together they covered 12,649 square feet.
That split runs through the Texas life sciences story heading into the back half of 2026. The region’s traditional lab fundamentals remain soft while capital pours into production at a scale the state has never seen.
“Houston is well positioned to benefit from the recent surge in advanced manufacturing investment,” said Elizabeth Berthelette, Managing Director and Head of Northeast Research and National Life Science Research at Newmark.
Berthelette said the Lilly and BMS commitments are helping put Houston on the map specifically for biomanufacturing, a sector Newmark’s second-quarter national report identifies as one of the most significant green shoots in the U.S. life science market. Pharmaceutical companies have committed upward of $500 billion to U.S.-based manufacturing and research infrastructure over the past year, according to the report, with more than 70% of active pharmaceutical ingredients used domestically still produced abroad.
The lab side of the ledger looks different. Houston vacancy held at 26.3% in the second quarter, unchanged year over year but up 80 basis points from the first quarter, Newmark reported. Net absorption ran to negative 102,647 square feet year to date across a 4.3-million-square-foot inventory. Nothing is under construction.
“In terms of traditional lab clusters, Houston is still emergent with much of the ecosystem’s growth driven by institutional growth and collaboration,” Berthelette said. “The region’s maturing manufacturing landscape will only elevate Houston’s status as a biotech hub.”
One figure in the national report demands a second look. Houston asking rents rose nearly 175% year over year, an outlier among the 13 markets Newmark tracks. Berthelette attributed the jump to a new Texas Medical Center delivery commanding well above average rents and pulling the market average with it rather than to any surge in tenant appetite. Houston’s average asking rate stood at $65.31 per square foot triple net at the end of the quarter.
“New construction typically garners higher pricing across markets, ultimately impacting our weighted average rent calculation,” Berthelette said.
Houston carries one distinction the core markets would envy. Sublease availability sat at 0.0%, the only market in Newmark’s coverage with none at all. Boston reported 7.2% and the Research Triangle 8.6%.
Berthelette traces that to how Houston grew. The correction reshaping the life science sector has concentrated in core markets that saw above-average run-ups in venture funding, IPOs, capital investment, company formation and development, she said. Emerging markets have ridden a less volatile cycle. Homegrown spinouts and institutional support for early-stage companies, common in Houston, Chicago and New York, have helped insulate those markets from the same swings.
Deal activity in the Texas Medical Center corridor has not stopped, though it has changed shape. Cerenome Inc., formerly Plus Therapeutics, added 25,000 square feet at Hines’ Levit Green in August, bringing the company to 36,500 square feet at the 53-acre district adjacent to the medical center. Hines, developing Levit Green with 2ML Real Estate Interests and Harrison Street, has leaned into turnkey suites in the 5,000-square-foot range for smaller-footprint users.
Smaller manufacturing plays are following the majors. Sugar Land-based DeliverIt Group received $1.3 million in incentives toward a 60,000-square-foot pharmaceutical manufacturing facility behind its headquarters on Dairy Ashford Road, a roughly $11.8 million project adding 55 jobs.
North Texas is running its own version of the trade. Three tenants at Dallas’ Pegasus Park campus (CG Oncology, Highlander Health and LH Capital) expanded onto the office tower’s 16th floor this spring. The campus, developed by J. Small Investments with Lyda Hill Philanthropies, added the 135,000-square-foot Bridge Labs facility in 2024 to give growth-stage companies somewhere to land after outgrowing BioLabs incubator space.
For owners waiting on the vacancy overhang to clear, the timeline runs through markets far from Texas. Most life science markets Newmark tracks still carried vacancy above 25% in the second quarter.
“Developer (and lender) appetite for new projects will likely return once a more sustained vacancy recovery has taken hold,” Berthelette said. “A sustained fundamentals recovery among the core markets will also signal a more amenable development landscape as a rising tide tends to lift all boats.”
