The U.S. life sciences real estate sector is moving toward a gradual rebalancing as development activity contracts, investment sales recover and funding conditions strengthen, according to the latest Life Sciences Update from Cushman & Wakefield. While elevated vacancy and softer rents continue to weigh on near-term fundamentals, a reduced construction pipeline and improving demand indicators are positioning the market for healthier long-term growth.

U.S. life sciences asking rents averaged $64.17 per square foot (psf) in the second quarter of 2026, down 2.2% quarter-over-quarter (QOQ) and 5.3% year-over-year (YOY). Despite the decline, life sciences rents remained 37% above traditional office rents across the 12 major markets tracked by Cushman & Wakefield.

Vacancy remained elevated as the market continued to absorb recently delivered space. The overall U.S. life sciences vacancy rate increased from 23.4% at year-end 2025 to 24.3% in Q2 2026. However, sublease vacancy edged down to 3.4%, while Chicago and Raleigh-Durham recorded meaningful declines in overall vacancy as stronger absorption helped reduce available space.

“The U.S. life sciences market is moving through a necessary period of adjustment as it absorbs the significant amount of space delivered in recent years,” said Sandy Romero, Head of Office and Alternative Insights at Cushman & Wakefield. “The slowdown in new construction is an important step toward bringing supply and demand back into better balance.”

The construction pipeline has contracted sharply from its 2023 peak. Less than 6 million square feet (msf) is currently under construction, representing just 2% of existing inventory, compared with 35 msf in 2023 when projects under construction represented 17% of total inventory. Approximately 4.4 msf is scheduled for delivery through 2027, with 69% already preleased.

The shift toward more demand-driven development is becoming increasingly evident. Half of the tracked U.S. markets currently have no space under construction, while build-to-suit projects account for a growing share of the remaining pipeline. Of the 4.1 msf expected to deliver by year-end 2026, 72% is already preleased, limiting the amount of new speculative space entering the market.

Capital Markets Show Signs of Renewed Momentum

Capital markets are also showing signs of renewed momentum. U.S. R&D sales volume topped $9.3 billion over the four quarters ending in Q2 2026, up 4% YOY, while the number of transactions increased 9% YOY. Average deal size declined 5% YOY, reflecting a measured recovery in investment activity.

Transaction activity remained concentrated in the largest markets, with the top five U.S. metros accounting for 81% of total R&D deal volume in the first half of 2026. San Francisco led with $1.7 billion in sales, followed by the D.C. Metro, Boston, Dallas and Reno. Seattle, the D.C. Metro and Chicago recorded the strongest growth in sales activity among leading metros.

The recovery in capital availability extends beyond real estate. U.S. life sciences venture capital funding surpassed $17.7 billion in the first half of 2026, representing 55% of full-year 2025 investment, while average deal size increased 33% above the 2025 average. IPO activity also strengthened, with nearly $4.5 billion raised across 17 offerings, already 59% above full-year 2025 levels.

“Improving funding conditions are a positive signal for the industry, but the impact on real estate demand will take time to emerge,” added Romero. “As companies put new capital to work, hiring, research activity and space requirements will be important indicators to watch as the market moves through the next phase of the cycle.”

Labor market activity provides some encouraging signs for future demand. Average monthly life sciences job postings increased 8% YOY during the first half of 2026, while 14 of the top 20 markets for job postings recorded YOY growth. New York remained the leading market for total job postings, while Atlanta and Indianapolis posted some of the strongest growth at 13.2% and 12.2%, respectively.

The report is available to view here.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for occupiers and investors with approximately 53,000 employees in over 350 offices and nearly 60 countries. In 2025, the firm reported revenue of $10.3 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com.

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