by Michael Walsh
October 20, 2025 — The U.S. life sciences real estate market has reached an inflection point, creating new opportunities and challenges across the industry. The 2025 Life Sciences Real Estate Perspective and Cluster Analysis from global commercial real estate and investment management firm JLL reveals a market environment increasingly favorable to tenants, with 61 million square feet of lab space available as demand patterns have shifted considerably. In addition to revealing the top life sciences ecosystems, the report discusses the key trends reshaping the industry, including global pharmaceutical companies pledging $475 billion year-to-date in U.S. manufacturing and research and development (R&D) investments, the critical need for venture capital investment in the sector, artificial intelligence (AI) and a projected 18.7 million square feet of available space likely shifting to alternative uses by 2030.
We’re witnessing a historic market correction that, while painful in the short term, is setting the stage for a more sustainable and innovative future. The current oversupply situation represents both the culmination of an unprecedented supply cycle and the beginning of a fundamental alteration in how life sciences companies approach real estate. JLL projects that 18.7 million square feet of available space will likely shift to alternative uses by 2030. The companies and markets that adapt to these new realities will emerge stronger and more competitive.
Travis McCready, Head of Industries, Leasing Advisory and Chair, Global Life Sciences Advisory Board, JLL
Key findings from JLL’s comprehensive market analysis:
- $405 billion in global pharma U.S. investment commitments year-to-date
- 61 million square feet of lab space is now available (3x more than 2021)
- AI-native biotechs now represent one-third of all biotech VC deals
- New efficiency models with AI companies using one-third less space per employee
- Market rebalancing as 18.7 million square feet is expected to transition to alternative uses by 2030
Trade tensions spark $475B pharmaceutical investment surge
Despite current headwinds, the fundamentals supporting long-term growth remain robust. Global pharmaceutical companies have accounted for their highest share of R&D leasing activity in recent history as venture-backed leasing has receded. Evolving federal policies are accelerating pharmaceutical reshoring discussions, with global pharma companies signing one-third of midsize and large R&D leases year-to-date, keeping pace with elevated share of leasing in 2022 and 2024.
Specialized hubs are positioning themselves as critical nodes in the evolving pharmaceutical supply chain as reshoring accelerates. New Jersey leads biomanufacturing capabilities, followed by Raleigh-Durham and Boston. In medical technology innovation, the Bay Area dominates with the highest concentration of medtech clinical trials and venture capital deployment in healthcare devices, followed by Minneapolis and Boston.
AI-native biotechs reshape space requirements while VC capital awaits deployment
Boston maintains its position as the top overall life sciences market, followed by the San Francisco Bay Area and San Diego; however, recognizing that future market strength will depend on a market’s ability to foster early-stage company formation and growth, the report introduces a new ranking to evaluate startup ecosystems led by the Bay Area, Boston and Greater DC and Baltimore.
As AI investment crowds out other sectors, biotech’s share of total VC dollars declined from approximately 15% historically to just 7% in recent quarters; however, major venture firms have raised capital at unprecedented rates since January 2023, potentially creating substantial dry powder for future deployment. AI biotechs are growing rapidly, accounting for one-third of all biotech VC deals year-to-date while also leasing roughly one-third less space than traditional tenants.
The integration of artificial intelligence into life sciences is fundamentally altering the physical infrastructure requirements of the entire industry. AI-native companies are pioneering new models of space utilization that emphasize computational power, automation and flexible laboratory configurations. This represents a significant shift in lab design and space planning.
Mark Bruso, JLL Director, Boston and National Life Sciences Research
JLL’s analysis provides AI rankings, reflecting the technology’s growing influence on real estate requirements. The San Francisco Bay Area leads in AI integration, followed by Boston, Los Angeles, San Diego and Seattle. These markets demonstrate the highest concentrations of AI-enabled life sciences companies, patent activity and VC deployment in convergence technologies.
Talent ecosystems emerge as competitive backgrounds
This talent concentration is becoming increasingly critical as companies compete for specialized skills, with Boston leading in comprehensive workforce strength and educational development followed by the Bay Area and Greater DC and Baltimore. Boston’s dominance stems from the strongest growth in life sciences industry employment, the biggest increase in research-focused roles over the past five years and the highest volume of life sciences job openings.
The current market dynamics are forcing a fundamental reassessment of how life sciences companies think about real estate strategy. Markets that can attract and retain top-tier scientific talent while offering space efficiency and technological infrastructure will have decisive advantages. Companies are evaluating entire ecosystems that can support their evolving workforce and operational needs.
Kevin Wayer, Division President, Global – Life Sciences, JLL
When innovation flows east, real estate follows
Chinese biotechnology companies now account for four times the in-licensing deals with U.S. biopharmaceutical firms compared to 2021 levels, with risk capital increasingly flowing eastward to capture Chinese intellectual property. This trend is creating additional pressure on domestic lab demand while shifting leasing patterns toward office-heavy configurations, with 72% of leases signed post-licensing being offices compared to biopharma’s typical 40% office share.
The globalization of life sciences innovation is creating both competitive pressures and new opportunities for markets. Those that can demonstrate clear advantages in talent density and innovation infrastructure will be best positioned to compete in this landscape.
Maddie Holmes, Senior Research Analyst, Life Sciences Industry Insight and Advisory, JLL
Markets adapt or get left behind
The report projects gradual market stabilization driven by supply rationalization rather than dramatic demand recovery. JLL forecasts that availability rates will decline from current levels of 29% to approximately 20% by 2030, assuming continued below-average absorption coupled with significant supply exits through distress sales and adaptive reuse projects. This timeline suggests a prolonged adjustment period, with recovery varying significantly across markets and submarkets.
The life sciences real estate market is undergoing a fundamental restructuring that extends far beyond typical market cycles. While current vacancy may not return to equilibrium until 2030 or later in most markets, the convergence of AI-driven efficiency, federal policy reshoring and supply rationalization is creating an evolving industry landscape. Markets that can successfully navigate this transition by embracing technological innovation, attracting AI-native companies and capitalizing on pharmaceutical reshoring will emerge as the next generation of life sciences powerhouses, while those that fail to adapt risk being left behind in an increasingly competitive global ecosystem.
Read the 2025 Life Sciences Real Estate Perspective and Cluster Analysis at JLL.
