Lab Landlords Pony Up, Cut Rents In Tight Contest For Tenants

When Twist Bioscience needed to expand its space in South San Francisco last year, it became the belle of the ball in a national lab leasing market starved of demand for more than a year.

The company was able to grow to nearly 94K SF at 681 Gateway Blvd., scoring several prime concessions along the way, including 15 months of abated rent, phased occupancy and a generous tenant improvement allowance in a package worth $30M. 

It is also paying roughly $64 per SF, a discount from the $71-per-SF average in San Francisco.

The company’s experience underscored the development of a renter-friendly market that offers biotech firms financial relief at a tough moment for the industry — at the expense of increasingly anxious landlords.

“In June or July last year, owners had an epiphany: ‘We can’t create demand. We have no choice. Let’s lower our rates,’” Newmark Executive Managing Director Eric Bluestein said.

It has been a difficult road for lab landlords, with just 346 lab leases in the U.S. last year, down from 530 at the market peak in 2021.

The slowdown has caused major players like Alexandria Real Estate Equities, which, along with BXP, manages the building where Twist is located, to offer outsized concessions and free rent to lure tenants. Life sciences rents ended 2025 down 3.1% to $66 per SF, according to Cushman & Wakefield.

Rent cuts, a rare thing in CRE, demonstrate the lengths to which landlords are increasingly willing to go to combat the roughly 24% nationwide lab vacancy rate that spikes as high as 33% in some top markets.

The financial perks of landlord concessions come at a fortuitous time for life sciences companies, which are coping with flat venture capital investment levels and a tumultuous run of policymaking from Washington, D.C.

But landlords looking to score a coveted lab tenant need to go beyond financial incentives, Longfellow Real Estate Partners Managing Partner Peter Fritz said. Biotech companies want a supportive partner. Specifically, they want a landlord that is extremely flexible, deferential and willing to compromise.

“If someone’s looking for just the cheapest price for space, there’s a lot of options out there,” Fritz said. “But most are looking for the best value.”

The deal Twist secured illustrates how landlord concessions help companies preserve cash and capital, according to Savills Vice Chairman and Head of Life Sciences Austin Barrett, who represented the firm.

“Whether you're a public company focusing on your profit and loss statement or an early-stage private, venture-backed company focused on cash, it’s all about how you defer cash payments,” Barrett said. 

Bluestein represented another client seeking 15K SF to 20K SF in the Bay Area. They toured 23K SF that had everything the client was looking for. At first, the client was adamant that it couldn’t go for a larger space than needed, but after inquiring and then negotiating with the owner, they scored effectively 60% off market rents due to concessions. 

“The punchline is, if you really want the space and it's within the realm, go for it,” Bluestein said. 

Concessions for new leases can even go beyond free rent to include negotiating down operating expenses and taxes during free rent periods, setting up phased rent structures, eliminating management fees and adding favorable terms for renewals and potential expansions.

For brokers, that means trying to pitch deals that conserve capital, improve operational efficiency and critically look at which spaces should even be toured and touted, given the vast number of options, Barrett said. With so much space and time available, companies take longer to convince.

“One thing that's required, in addition to all the concessions, is patience,” said Newmark Executive Managing Director John Hundley, who is based in San Diego.

But the bottom line is extending cash flows and conservative budgeting.

To compete with others offering sweeteners, owners need to make generous deals for big tenants facing renewals. Since leases tend to be structured with gradual rent increases of 3% or so in the final few years of a contract, tenants have started approaching landlords well before the lease ends to renegotiate those increases. 

Tenants and operators are starting negotiations early and digging into each other’s finances, Barrett said. If a startup is struggling to get bridge financing or can’t get a Series A or B fundraising round done, landlords know they lack some financial stability and can push back against some concessions.

At the same time, tenants want to make sure landlords aren’t facing serious strain with their cash flow. Moving into a building and having the owner face its own financial strain interrupts research and commercialization.

“Boards especially are being very prudent on capital expenditures and the long-term commitments,” Fritz said. “Deals are taking longer because they’re started earlier. Instead of looking three or six months ahead, they’ll come out 12, 16, even 18 months prior to expiration to run a really long, thorough process to make sure they’re getting the best value.”