Recent lab leases signed in the South San Francisco submarket show landlords cutting effective prices to lock in tenants, heading off a flood of sublease space and a coming supply increase in a busy part of the Bay Area ringed with new developments.

The shift, a “remarkable” market adjustment, according to a recent analysis from Newmark, is “substantially reducing occupancy costs for tenants,” and analysts see it as a sign of a key market shift.

“Smart landlords are addressing the situation,” Newmark Executive Managing Director Eric Bluestein said. “They’ve been proactive trying not to get lost in the dust, so they’ve gotten aggressive and are offering a lot of free rent and tenant improvements.”

Newmark’s sublease tracker shows 67 lab subleases in the Bay Area totaling 1.86M SF, with 40 of those spaces having come online since Jan. 1, Bluestein said.

Other Newmark research shows there is 7.7M SF of lab space under construction in the Bay Area market as of Q1, nearly double the amount in the pipeline a year ago.

Since the start of May, three startups have signed leases that, when taking higher-than-normal rent concessions and tenant improvement investments into account, offer significant decreases in total cost for the first five years of the agreements.

Newmark compared these leases today to what they would have been expected to cost 15 months ago and found significant savings for the biotech tenants, ranging between 10% and 30%.

These tenants include: pregnancy-focused Mirvie, which signed a lease at 651 Gateway Blvd., a Boston Properties and Alexandria Real Estate project; Ideaya Biosciences, a precision oncology firm with a new lease at DivCo West’s 5000 Shoreline Court.; andZero Acre Farms, a cultured oil startup, which signed a lease at Phase 3’s Genesis project in San Mateo.

Bluestein said this dynamic will continue in the short term, with landlords getting aggressive with rent concessions and tenant improvement spending to maintain higher face rents and stave off competition.

This dynamic underscores how the Bay Area is beginning to recover from a slow, uncertain market ahead of peer markets in San Diego and Boston, Bluestein said.

He said the diversity of Bay Area biotech, with its particular focus on hot technologies like gene sequencing, artificial intelligence and food tech, have helped the region attract venture capital, creating more startups that can be opportunistic and take advantage of the market. San Diego and Boston will come back and see similar dynamics play out, he said, but they are slightly behind the Bay Area.

“It’s not a bloodbath, per se, but certainly, the pendulum has swung more in the favor of tenants,” Bluestein said. “There’s more existing space, and landlords will be more aggressive to compete.”

CORRECTION, JUNE 30 5:30 PM ET: A previous version of this story contained inaccurate data on lease terms supplied by Newmark. They have since updated their calculations, and the story reflects those changes.