After years of rapid expansion during and after the COVID-19 pandemic, the U.S. life sciences building market is recalibrating. In major U.S. hubs, developers are dealing with high vacancies, tighter capital requirements and slower tenant demand, even as pharmaceutical manufacturing and specialty research projects continue to move forward.
Several recent market analyzes suggest that the industry’s rapid expansion cycle outstripped demand in some markets.
A first-quarter 2026 US life sciences analysis by commercial real estate services firm Newmark said development has been “all locked up,” with much of the remaining pipeline expected to be delivered over the next year, while biomanufacturing has emerged as one of the industry’s strongest growth categories.
The current slowdown may reflect more than a temporary setback.
“While the reduction in life sciences development is cyclical, there appears to be a more structural shift in exposure to life sciences assets among owners and developers,” Elizabeth Berthelette, managing director of research at Newmark, told ENR. “Those who jumped into life sciences development at the height of this cycle’s growth period are moving back into more core assets.”
Boston’s Fenway Center may provide a prime example of this transition.
Last December, developers completed one of the city’s most technically complex air rights platforms above Interstate 90 and an active commuter rail before halting the planned life sciences towers amid weaker market conditions and financial uncertainty. Meanwhile, projects linked to specific operational needs continue to move.
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In January, Genentech announced plans to more than double its investment in a biomanufacturing campus in Holly Springs, North Carolina, to about $2 billion. Two months later, Procter & Gamble announced plans for a nearly $1 billion Gillette research and innovation headquarters in Boston centered on a 335,000-square-foot laboratory and research building.
According to Peter Walters, senior fellow for advanced therapies at CRB, a life sciences-focused engineering, architecture and construction firm, project pipelines are increasingly looking different than they did just a few years ago.
“The industry is experiencing a marked increase in the number of large-scale or mega-scale projects (greater than $1 billion in construction cost) for large-scale API and protein manufacturing, which require much more complex and infrastructure-heavy construction than traditional projects,” he said.
These projects often require extensive process piping, stainless systems, utility redundancy, and cleanroom infrastructure that differ substantially from speculative laboratory buildings.
DPR Construction sees the transition as more nuanced.
“DPR’s life sciences portfolio remains balanced between manufacturing and R&D opportunities,” Dennis Kirkpatrick, DPR Construction’s senior life sciences market leader, told ENR. “The US continues to see a shift towards manufacturing investment by biopharma companies, but the R&D market remains a crucial piece of its capital portfolio.”
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Excess supply meets a market reset
Instead, contractors describe an increasingly selective market and increasingly concentrated around projects with a clearer operational purpose.
Vacancies in the five largest US life sciences markets rose from about 7% in early 2021 to 30% in the first quarter of 2026, reflecting the sector’s post-boom supply recovery.
Source: Newmark
The development cycle brought about by the COVID-19 pandemic produced unprecedented laboratory inventory. International real estate services firm Savills reported nearly 60 million square meters of life sciences space delivered in major US centers between 2020 and 2025.
Greater Boston illustrates the pressure. Colliers reported that vacancy exceeded 34% entering 2026, with approximately 19.7 million square feet available. Commercial real estate advisory firm Cresa described conditions as a “supply-driven restart” as projects launched in the 2021-23 cycle continue to enter a market where speculative development has largely stalled.
Disruptions in research funding and investment patterns also appear to be reshaping demand. Newmark cited more than 5,800 National Institutes of Health grants canceled or frozen through 2025, raising questions about future research activities and expansion plans at some of the nation’s largest life science centers.
At the same time, the company’s report noted that pharmaceutical companies committed more than $500 billion to U.S. manufacturing and research infrastructure last year.
Kirkpatrick said manufacturing remains the anchor of the industry and the major manufacturing projects announced in 2025 are now being executed.
“We continue to see major project starts for manufacturing in 2026 in the southeastern and northeastern United States,” he said. “The amount of activity is driving movement in emerging geographies from Georgia westward to Alabama and Texas.”
Walters said technology may also be changing lab requirements: “With the support of AI and molecule modeling, companies seem to be able to do more with the footprint they have.”
