Does the decision of Alexandria Real Estate Equities to cancel its conversion of a Boston office complex to a life sciences lab spell worsening trouble and more vacancies in that industry sector? Boston has been one of the country's strongest life sciences markets, so as Boston goes, do other markets follow?

Alexandria Real Estate is now offering to sell the suburban Boston office complex at a 28% discount from its valuation at $170 million rather than proceed with the conversion. The offered price is almost a third of what the company paid three years ago. The reason is said to be a softening market, according to a Green Street Report. The softening began in Boston last year as interest rates rose and venture capital funding started to decline, dropping to $3.6 billion in this year's first quarter, which mirrored pre-pandemic 2019 quarterly levels.

Fundamentals, though, are also softening in other life sciences markets beyond Boston. The lab/R&D vacancy rate increased by 132 basis points (bps) quarter-over-quarter and 170 bps year-over-year to 6.7% for the first quarter, according to CBRE.