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Life sciences landlords face slow, uneven lab market recovery
Rental rates for lab space nationwide are down nearly 18% since 2023, and free-rent terms for new leases have risen to one month for every year of lease term.
Life sciences landlords are bracing for a slow and uneven recovery as leasing remains subdued and lease expirations continue to pressure space demand, Bisnow reports. Operators described the current environment as a tenant-retention “hand-to-hand combat” scenario, focused on backfilling vacancies amid tenant-friendly deal structures.
JLL data cited by Bisnow shows rental rates nationwide have declined nearly 18% since 2023 to $64 per square foot. The report also says average free-rent terms for new leases have climbed to one month for every year of lease term.
In individual deal examples, Bisnow points to TransMedics’ planned move to BioMed Realty’s 188 Assembly Park Drive project in Somerville, Massachusetts, where the company is set to receive nearly two years of free rent. The terms cited include a base price of approximately $3.50 per square foot per month, or about $42 per square foot annually.
Landlords are also broadening their tenant search beyond traditional biotech, according to Colliers Executive Vice President Joe Fetterman, as they seek to fill properties. Bisnow also cites Alexandria Real Estate Equities Chairman Joel Marcus saying the industry has become “decoupled from demand on the ground,” and notes BioMed faces 1 million square feet of lease expirations in 2027, with 1.5 million square feet leased over the past 12 months, representing 8% of its total portfolio.