Life Sciences Starts to Slow Leading to a Few Years of Moderate Deliveries

Serving currently as a “haven” for commercial real estate developers and investors, the life science sector is experiencing unprecedented expansion, with 2024 on track to become a record year for lab space deliveries, according to a new report from Yardi’s Commercial Edge.

The anticipated surge in completions this year is expected to put downward pressure on the life science sector in the upcoming years, according to the report.

This “potentially” is leading developers to approach new projects with increased caution, Commercial Edge said.

“Consequently, we anticipate a slowdown in new construction starts in 2024, leading to a more moderate pace of completions in 2025,” according to the report.

Currently, 6 million square feet of life science space is slated to come online next year. Life science development accounts for 27% of all office projects expected to be completed this year.

The recent run-up has been impressive. To put this growth into perspective, the total life science space finished between 2019 and 2023 was 29 million square feet, just a bit more than the 22 million square feet anticipated for completion this year alone, said Commercial Edge.

R&D facilities have seen a consistent increase in completions from 2019 to 2023 and this year’s deliveries are anticipated to be 164% higher than the 1.6 million square feet delivered pre-pandemic. This highlights the growing emphasis on innovation and development spaces across industries.

Not surprisingly, two-thirds of the life science construction projects expected to come online in 2024 are in either Boston, the San Francisco Bay Area, or San Diego.

However, Commercial Edge said that as construction loans become more difficult to come by and office vacancies tick further up, it predicts that starts will continue to slide even further in 2024, leading to more moderate deliveries over the next few years.