The numbers paint an undeniably poor picture of life sciences leasing in New York City last year. According to CBRE data, lease volume was down 13% year-over-year in 2023, with just 398K SF of life sciences space taken, and asking rents closed out 9% below the previous year, which was a record high. Momentum has definitely stalled.

“It’s pretty slow all around, globally,” CBRE Vice Chairman Bill Hartman said. “New York is no different.”

But what may set New York City apart is the reliance the city’s life sciences market has on institutional tenants, such as large universities. Last year’s numbers were significantly buoyed by Weill Cornell Medicine’s 260K SF lease at 1334 York Ave., a former Sotheby’s space. The deal, in the works for a few years, accounted for 65% of the total lease volume in the city, according to Hartman. Institutions have always represented a majority of leasing in the city’s lab market.

New York City’s decline isn’t unique. Boston and San Francisco also had tough year-end numbers in terms of leasing volume. Nationally, 2023 was a difficult year for VC funding and leasing. But New York City’s leasing activity still hinges significantly on institutional tenants as opposed to entrepreneurial ones that dominate the major markets.

Last year wasn’t an anomaly. In 2022, institutions again dominated leasing, representing many of the biggest deals of the record 455K SF total.

This year, the biggest leasing news thus far has been NYU Langone’s 105K SF lease at Innolabs. Alexandria Real Estate Equities, the sector’s biggest development, also sold a Midtown property that was formerly the Pfizer HQ, passing on redevelopment due to challenges in the city’s life sciences market.

“There hasn’t been a lot of new company formation, or growth in newer companies,” Hartman added. “Newer companies also haven’t been growing. Institutions are always a big part of the leasing. Maybe someday when there’s more activity and larger companies, that’ll be different.”

Even with the city’s significant funding of biotech as part of a larger economic development effort, with more than $1B going towards lab development, many of the big leases continue to be legacy city institutions that are perhaps unlikely to pick up and move elsewhere. Hartman said the city’s efforts have been important to expanding overall lab development in the city, which CBRE forecasts to grow from 3M SF to 5.2M SF by 2029.

Ed Jaram, senior director at King Street Partners, a development partner at Innolabs which signed the Langone lease, said institutions are a strong part of any successful biotech hub. It’s key for New York City as it expands and grows and turns academic talent into entrepreneurial startups. But he also believes the city's startup growth, and the appetite of these firms for more lab space, has been underwhelming recently.

“It’s true that the Series A growth has not been as steep over the last couple of years as it might have been,” he said. “But I think it’s mostly due to macroeconomic factors. We’ll see growth come to the fore again once the wider macro environment has changed.”