The U.S. life science market showed clearer signs of stabilization in the fourth quarter, with leasing activity, net absorption and vacancy trends all improving as the sector reached what appears to be the bottom of its correction cycle. National vacancy declined for the first time in more than a year, while several leading hubs posted occupancy gains supported by selective tenant expansion and sustained activity in the Bay Area, Research Triangle and Philadelphia.
Capital and funding activity also improved toward the end of the year. Venture capital funding rose for the second year in a row, with investors increasingly focusing on more established companies and leading life science markets. M&A activity jumped in the fourth quarter as pharmaceutical companies moved to acquire new pipelines ahead of upcoming patent expirations. At the same time, new lab construction has largely paused across most markets, helping reduce future supply pressure as most remaining projects are build-to-suit. Along with growing investment in domestic biomanufacturing, these trends point to improving market fundamentals heading into 2026.
Key Takeaways:
- Leasing activity improved across major markets, led by large Bay Area transactions as tenant expansion resumed.
- National vacancy fell 30 basis points in 4Q25 to 25.8%, the first quarterly improvement in over a year.
- U.S. life science venture capital funding reached $28.2B in 2025, rising for a second straight year and favoring later-stage companies.
- M&A activity surged in 4Q25, lifting annual investment volumes above long-term averages.
- More than $48B in domestic biomanufacturing investment was announced in 2024–2025, supporting future demand.
- New lab development has largely stalled, with eight major markets reporting no active construction, easing supply pressure.
