The Bay Area life sciences industry is experiencing a decline in venture capital funding, which mirrors the rising vacancy levels within the sector. According to Avison Young, VC funding for the fourth quarter of 2023 barely surpassed $500 million, a significant decrease compared to the boom seen from 2020 to mid-2022 when quarterly funding regularly exceeded $2 billion.
Avison Young explains that as we navigate through a post-pandemic landscape and enter into a higher-interest environment, there has been less interest in volatile biopharmaceutical investments. Additionally, with an increase in attention towards headline-making AI industries, it is not surprising that investors are currently shifting their focus away from life science ventures.
As a result of this trend, more and more life science companies are choosing to sublease their spaces. This has led to steady growth in vacancy rates for these types of properties since 2022 according to Avison Young. With over seven million square feet currently under construction and expected completion dates between 2024-2025,”the life science market may face potential challenges with vacancies.”
This article was originally published on Connect CRE’s website.
