While many companies have turned to remote working, leaving office spaces empty, science laboratories could be bucking that trend.
A bearish market and a decrease in venture capital funding and investments may not majorly affect the life sciences real estate in the long run, according to a new report.

“In the life science sector, the need for real estate has fared better than, say, traditional office situations where work-from-home schemes were implemented and still are in play today with hybrid work,” Elizabeth Berthelette, director of research at Newmark who was involved in the research, told Endpoints News.
“Scientists on the other hand need to be in labs,” she added.
Laboratory space collectively comprises more than 93 million square feet of the United States. Moreover, it has a future construction and renovation pipeline of 33.2 million square feet with major life sciences clusters in Boston, San Francisco, San Diego and Raleigh, the Newmark report found. And each of the hubs has its own unique dynamics.
For instance, in San Francisco, the demand for lab space has skyrocketed. While an estimated 5.2 million square feet of lab space is projected to be delivered in 2022, tenant demand is expected to absorb the majority of this space.
In Boston, another major life sciences hub, a rise in sublease options and anticipated new supply have shifted more bargaining power to tenants, which could impact concessions and rents in the second half of 2022, the report said.
The rise in excitement following massive funding and IPOs of biotech during the pandemic fizzled at the beginning of 2022. SPDR S&P Biotech ETF, a leading biotech index, has fallen nearly 28% since the beginning of 2022 and 36.2% since the end of August 2021.
Life sciences venture capital funding declined 18.5% year-over-year to $20.8 billion in the first half of 2022. However, it was still greater than every full-year amount prior to 2018, the Newmark report added.
“In the long term, we are bullish on life sciences, given the aging population, the emphasis on new scientific technologies and biologics,” said Berthelette.
Despite a bright short-term future, the biotech industry, like other industries, is not immune to market headwinds, and early-stage companies will be impacted the most, the report found.
“Macroeconomic deviations, inflation, rising interest rates, the cost of construction, the cost of debt, all of those things are rising,” Berthelette said.
As a result, many early-stage companies have turned to cash preservation, with some turning to layoffs or subleasing their research space.

Meanwhile, another report by CBRE noted that the life sciences sector has grown by 79% between 2001-2021, compared with 8% growth for all other occupations in the US. It also found there were more than 163,000 graduates in biological and biomedical sciences in 2020, double the number just 15 years ago.
Matt Gardner who leads CBRE’s Advisory Life Sciences practice in the US, said factors such as increased funding coupled with many people graduating with degrees in life sciences have resulted in increased hiring.
“Having a six to seven-year run of IPOs, and bullish venture financings, we saw that get invested in science and people in a way that they never experienced before,” said Gardner.