Lab Rents Down 20% In Boston, But A Deeper Reset May Be Needed To Revive Market

The life sciences market is finally showing signs of recovery after a three-year slump, but the industry hub of Boston has a deep hole to climb out of. 

Many big lab projects that started construction speculatively during the pandemic-era life sciences boom were unable to lease up after the sector's demand froze in 2023. Greater Boston's 51M SF lab market had 33.3% vacancy as of last quarter, the third straight year above 30%, according to JLL.

The sector is showing some signs of life, with incubator spaces reporting growing demand from startups. But that activity has yet to translate into the type of lab leasing Boston needs to bring down its sky-high vacancy, in part because startups have become more cautious about making lease commitments for big spaces. 

"If we're hoping to have this massive recovery, it's just not going to be this giant shoot to where companies are going to come out of the blue and take 5K SF, 10K SF, 15K SF in the next year or two," HelixPoint Capital Managing Partner Joe Collura said last week at Bisnow's Boston Life Sciences Conference, held at Harvard University's David Rubenstein Treehouse. 

"And each of these empty buildings are 300K SF, 400K SF. It's just not reality."

The best way for the real estate industry to reduce the amount of vacant lab space on the market is by taking buildings that had been speculatively converted from office to labs and turning them back into their prior use, Collura said, a trend that has begun to occur. 

The other way landlords are attempting to drive absorption is by bringing down rents. 

Greater Boston's asking rents have fallen more than 20% since mid-2022, including a 9.7% drop between the first quarter of 2025 and 2026, according to JLL.

But rents may have further to fall, as labs in Boston are still more expensive than the other top markets. Boston's average asking rent of $76.72 last quarter was above the $68.64 in the Bay Area and the $64.30 in San Diego, and more than double the $37.77 in Raleigh-Durham.

Owners have a limit to how much they can drop rents without losing money on a building, and many developers that built during the lab boom did so with a high cost basis that makes it impossible to accept much lower rents. But if a building goes through foreclosure or sells at a steep discount, the new owner has more flexibility to offer cheaper rents. 

"We’re looking at creative ways to come in and trade and reset that basis to meet the market where it’s really at in terms of the rent rates," Collura said. "That will also help enable companies to get in and scale faster."

Those basis-resetting deals have been occurring over the last year, and industry leaders expect they will become more common. 

"At some point, unless we believe that a tidal wave of absorption is on the horizon, we're likely to see more distressed trades and more basis resets in the not too distant future," The Davis Cos. Senior Vice President Jon Needham said. 

In May 2025, Northeastern University acquired the Burlington BioCenter in Burlington for $33M, paying one-third of what MetLife did in 2022.

In February, battery manufacturer A123 Systems acquired the 115K SF building at 10 Corporate Drive in Burlington for less than $20M, a roughly 52% discount from what GEM Realty and The Gutierrez Cos. paid in 2021.

In March, New York-based Lightstone Group acquired the 175K SF lab building at 3 Burlington Woods Drive in Burlington for $16M, well below the $58M that GI Partners paid in 2022. 

Lightstone Group Senior Vice President of Life Sciences Acquisitions Chris Maciejczak said even with that type of basis reset, it can still be difficult for landlords to drop rents significantly. 

He said that although a building may trade at a low price, there are still other costs that need to be factored in, including utility and mechanical systems costs, debt payments and operating costs that are much higher than other asset classes.

"If you do the math right, you'll quickly find out, from a landlord's perspective, there's kind of a price floor," Maciejczak said.

While industry leaders don't foresee a tidal wave of demand on the horizon, they do see signs that the market is moving in the right direction. 

"Nearly every indicator suggests the market has bottomed out and begun to recover," says JLL's U.S. lab report, released last week. 

The report found that the four top markets — Boston, San Diego, the Bay Area and Raleigh-Durham — collectively experienced a 44% increase in leasing demand last quarter compared to Q1 2025. It found that the first three of those markets have averaged 75 deals per quarter over the last two years. 

That demand in Boston is being driven in part by "tough tech" companies in the AI, robotics, aerospace, defense and medtech sectors. Those users accounted for 30% of lab leases in Boston last year, the report found, triple the share from 2021. 

LabCentral CEO Maggie O'Toole has seen this type of demand in her incubator space. 

"While it may take awhile to fill up some of the empty buildings, I don't know if we really should say never, because of what I'm seeing right now with AI," O'Toole said, adding that LabCentral launched a hub for companies at the intersection of artificial intelligence and biotech. 

"We are getting applications from around the world for companies who want to be in that space, and we just have one small lab that's fitted out," she added. "We're already looking at how we expand that."

She said LabCentral received more than 80 total applications last year, well above the prior year and more than it had in 2018 and 2019. As of last week, it had 41 applications this year, and she said demand is typically higher in the second half of the year. 

"That gives me a lot of confidence that we're on the right track," she said.