Funding cuts to the National Institutes of Health (NIH) could impact the demand for life sciences facilities. A proposed 15% cap on indirect costs would reduce funding for facilities and administrative expenses and could cause research institutions to scale back and startups to shut down or slow operations, according to Savills Research and Data Services' U.S. life sciences market overview for the first quarter.
Ultimately, resources for occupancy needs at research institutions and universities could decrease, the report said. New York State is a top recipient of NIH funding and is expected to lose about $880 million due to announced federal cuts. In New York City, federal funding cuts have caused more than 100,000 square feet of life sciences space to be lost or delayed, although demand for spaces smaller than 15,000 square feet remains strong.
Meanwhile, drug pricing and access challenges are driving companies to invest in research and development and acquisition in an attempt to lower costs and improve consumer access, said Savills. The report noted that an example is AstraZeneca’s $425 million purchase of EsoBiotic to expand its cell therapy portfolios and improve treatment affordability.
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Venture capital funding in life sciences remains steady, reflecting continued caution amid global economic uncertainty. Most VC funding goes to early and late-stage companies with proven models where investors see strong potential. The largest funding deal during the first quarter was Eikon Therapeutics’ $350.7 million Series D investment in life-threatening disease treatments.
Both deal volume and the amount of capital invested fell in all markets studied by Savills for the first quarter. The San Francisco Bay area logged 87 deals for $2.5 billion during the quarter, the highest of the markets studied. Notably, Sutter Health is investing $1 billion to develop a 1.3 million square foot flagship medical campus in Emeryville and has acquired the 12-acre Emery Yards site for $450 million from BioMed Realty.
Boston logged $1.9 billion of capital invested through 69 deals. Biogen announced it will relocate its headquarters to a 580,000 square foot tower in Kendall Square, part of MIT’s Kendall Common project. The move is set for 2028 under a 15-year lease. In addition, The Davis Cos. acquired a 308,970-square-foot office and life sciences facility in Andover.
In the Denver-Boulder life sciences market, the University of Colorado at Boulder set a record with 35 startups between 2023 and 2024, surpassing its previous high of 20, driven by research in clean energy and biotechnology. In addition, CU Boulder, Colorado State University and Colorado School of Mines, in partnership with Elevate Quantum, are opening a 13,000- square-foot Quantum Incubator in Boulder to support startups with office space and advanced equipment, according to the report.
In Northern New Jersey, Biotech firm BeiGene opened a 400,000-square-foot life sciences facility in Hopewell at the Princeton West Innovation Campus, formerly occupied by Bristol Myers Squibb. The facility will focus on cancer drug manufacturing and research, said the Savills report.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
