After two bruising years of stalled leasing, empty megaprojects and tenant‑friendly economics, life sciences landlords say the lab market is finally showing the faintest signs of a turn. But even the most optimistic operators caution that any recovery will be slow and uneven.

Landlords are bracing for a long wait for demand to return in earnest, setting up a test of how long they can hold on before the recovery finally arrives.

“It’s hand-to-hand combat to retain your tenants and make sure that you're backfilling any vacancies and things like that,” CenterSquare Investment Management senior investment strategist and Global Head of Sustainability Uma Moriarity said.

The hints of hope for a recovery come from encouraging indicators for life sciences companies themselves, with biotech stocks pushing up toward levels seen in the banner year 2021. But those improvements haven’t yet made themselves known in the form of leasing demand.

By and large, operators and landlords still face subdued leasing performances and waves of upcoming expirations. The deals landlords have managed to eke out are marked by their sacrifices, including significant concessions that still reign in today’s tenant-friendly market.

Rental rates nationwide have declined nearly 18% since 2023 to $64 per SF, according to a JLL report. The average free-rent term for new leases has climbed to one month for every year of lease term. 

Earlier this year, the firm TransMedics announced a plan to relocate its global headquarters to BioMed Realty's 188 Assembly Park Drive project in Somerville, Massachusetts. TransMedics will get nearly two years of free rent and a base price of approximately $3.50 per SF per month, according to the terms of the lease. That works out to $42 per SF annually.

BioMed faces 1M SF of lease expirations in 2027 and leased 1.5M SF over the past 12 months, representing 8% of the total portfolio. 

In addition to rent incentives, landlords began turning to tenants outside of the traditional biotech space last year in a bid to fill their properties.

“There's no question that part of what you have going on right now is developers and their investors broadening the funnel [of potential tenants] significantly,” Colliers Executive Vice President Joe Fetterman said.

The broader industry is “decoupled from demand on the ground,” Alexandria Real Estate Equities Chairman Joel Marcus said on his firm’s most recent earnings call, during which the REIT noted decreases in rental rates and struggles attracting traditional lab tenants.  

Longfellow Real Estate Partners, which operates a 16M SF portfolio of lab and life sciences properties, has had similar struggles. The company’s all-electric Bioterra development in San Diego, a 323K SF lab development that opened in 2025, remains without any tenants.

Longfellow’s occupancy hovers around 80%, according to Peter Fritz, the company’s managing director. 

Kilroy Realty, which had 82% occupancy throughout its portfolio as of May, bet big on the sprawling Oyster Point life sciences campus in South San Francisco and has also seen leasing challenges at its marquee project. As of the company’s second-quarter earnings call, the second phase of the project is 49% leased and 7% occupied. 

A big signing for Phase 2, a 316K SF deal with the University of California, San Francisco, will actually reduce the anticipated cash flow, coming in about 100 basis points below original underwriting.

Oxford Properties Group has also struggled to fill its lab buildings with biotech tenants. The company is “seeing growing interest in our assets from advanced manufacturing occupiers,” a spokesperson told Bisnow. Big Pharma is also growing, aiding some leasing efforts.

Oxford finished the first phase of its 165K SF build-to-suit project for Ionis Pharmaceuticals in Carlsbad, California, in August 2025 and established a 75K SF lease expansion for Eli Lilly in a Boston Seaport property late last year.

The firm also signed a pair of leases at Foundry 31 in Berkeley, a 25K SF expansion and lease extension for a healthcare system tenant, and a 30K deal with a “producer of energy food,” according to a spokesperson. 

In March, BioMed signed a 15-year deal with CordenPharma, a contract development and manufacturing organization, for 64K SF in its FlatIron Park project in Boulder, Colorado.

BioMed bought the 1M SF development for $625M in 2022 at the height of the last life sciences boom, but the development has struggled to lease up. BioMed secured an extension on the $2.9B origination loan from Deutsche Bank, moving the due date to May 2027. 

The project is an example of the looming pressure that exists for developers that took out big loans during the industry’s pandemic-era boom, only to be faced with flagging demand once the projects were finished. Some are choosing to sell in the down market rather than face maturing loans.

Longfellow sold a lab development in New York City earlier this month for $87M after spending $92.5M to purchase it with a partner and making another $100M in property improvements.

“The market never materialized in the way that it was expected,” Fritz said. “New York really got hit harder than even the other markets.” 

Fetterman said he expects the real problems for landlords will be debt-driven. Pro formas will keep them from lowering leasing rates to attract tenants, buildings will lack cash flow, and they will succumb to the inevitable. 

The question is how long operators will have to hold on before the market comes back. 

“This is a case-by-case basis,” Fetterman said. “I don't think you're going to see a, you know, mass catastrophe in the life sciences space.”