The U.S. life sciences real estate sector is showing its first clear signs of recovery in years, with lab availability declining after a prolonged period of weakness. According to JLL, the market has effectively reached a bottom and is now beginning to rebound, ending four years of what the firm characterizes as unprecedented decline. Since mid-2025, lab availability has fallen by approximately two million square feet, a shift that includes the largest quarterly drop in available lab space seen in the past decade.
JLL links this inflection point to improving conditions in the broader capital markets and more stable tenant demand. Equity markets have become more receptive to biotech, helping to restore capital flows into the life sciences sector. At the same time, tenant demand has stabilized across the country’s top life sciences markets, supporting absorption of space and helping to reverse the oversupply that has weighed on performance in recent years.
The recovery, however, is uneven across the lab inventory. Newer buildings are benefiting disproportionately as users gravitate toward higher-quality, more modern facilities. JLL reports that properties delivered since the start of 2020 have collectively reduced their available space by 2.6 million square feet over the last nine months. This suggests that contemporary lab product is capturing a significant share of active demand as tenants upgrade their space and prioritize functionality, specifications and amenities that support current research requirements.
In contrast, older lab stock is facing mounting pressure. Inventory built before 2000 has added about 700,000 square feet of availability back to the market over the same nine-month period. This divergence underscores a pronounced flight to quality dynamic, where tenants are leaving or bypassing aging properties that may require substantial repositioning or capital investment to remain competitive with newer facilities.
Another emerging dynamic is the changing composition of tenants occupying lab space. JLL notes that AI, robotics and so-called tough tech companies are increasingly moving into lab buildings. This trend indicates that demand for specialized, highly technical environments is broadening beyond traditional biotech and pharmaceutical users, potentially reshaping how life sciences-oriented facilities are designed, programmed and marketed.
Summarizing the shift, Travis McCready, head of life sciences for JLL’s Americas markets and chair of the firm’s Global Life Sciences Advisory Board, says the market appears to have moved past its most difficult period. After years in which oversupply constrained performance, JLL now sees the sector’s primary challenge as supply rather than demand. The reduction in overall lab availability, combined with strengthening interest from capital markets and diversified technology users, points to a sector that is stabilizing but still working through significant disparities between modern and older assets.
