Market Observations
- U.S. venture capital funding is on pace to surpass 2023 levels, and the number of “mega-rounds” has increased materially.
- Continued momentum in FDA novel drug and biologics license approvals is signaling investment opportunities in the biotech sector.
- Amid labor market headwinds, life science-related employment is flat compared to year-ago levels. With that, R&D employment is faring better.
- The public markets appear to be thawing following recent interest rate cuts, with 21 biotech companies going public year-to-date.
- Tenant demand is holding steady, while leasing velocity has reached a 6-quarter high across four of the top life science clusters.
- Due to the rise in spec suites, sublets and second-generation space, lab users have their pick of available built-out spaces.
- Lingering vacancy in many key life science markets could take several years to work through.
- Supply risk continues to abate, with select development sites and existing assets pivoting to housing and office uses.
- Users considering owning their own real estate assets could drive investment sale volume in the life science sector.
