Lab Oversupply Is Pushing Leasing, Rent and Relocation Down

By Katie Anderson, Chief Editor, Pharmaceutical Online

The landscape of the U.S. pharmaceutical lab market is changing, according to JLL’s U.S. Life Sciences Property Report. In addition to the effort to bring pharma manufacturing back to the U.S. ahead of looming tariffs, an oversupply of space and lower tenant demand in large biopharma markets is dropping leasing rates, rent costs and lease duration, among other changes.

1. Lab Leasing Sees Marked Decline.

Though lab leasing saw a marked upward swing in 2024, it has taken a downward turn in 2025. Smaller deals make up the majority of leasing (76%) in 2025, with tenant demand being less. Contributing to this change are adjustments in policy and uncertainties about the stability of investments; however, lab leases are still above pre-pandemic levels.

2. Rent is Changing To Meet Demand.

Due to oversupply of leasing spaces and lower tenant demand, rent ask is changing, particularly in San Diego, Boston and the Bay Area. Oversupply has propelled the rent ask in these markets down, whereas the stability in the mid-size leasing markets has led to little change in rent ask.

3. The Lab Market Is Projected to Shrink.

Oversupply is also causing available lab space to go down, with oversupply areas (Boston, Bay Area, etc.) forced to change the uses of its lab space. JLL reported that 3.2 million ft² in lab space is changing uses. Half of that space is changing to a new user type, whereas the other half is due to capital changes.

4. Biomanufacturing Is Being Reshored.

As many of us know all too well, tariffs looming for pharmaceuticals has prompted biopharma companies to commit to bringing manufacturing back into the United States. JLL reported that 15 companies have pledged $270 billion in U.S. biomanufacturing investments over the next 5-10 years. Though some of that investment will go toward current biopharma spaces, it is projected that some will go to outside lab spaces and CDMOs.

5. Relocation and Leasing Are Down.

Lab tenants are signing shorter lease agreements, according to JLL. Seven year plus leases are down nearly 70%, and these groups are likely to renew rather than changing locations.

6. Tenants Want The Best.

With an abundance of lab spaces and lower lab leasing demand in the most popular markets, you can imagine that tenants have their pick of lab spaces. Because of this, tenants are looking for new spaces designed for pharmaceutical manufacturing.