Lab construction activity peaked during the pandemic but has since slowed down. Lab construction costs have increased by at least 20% due to inflation, rising material costs, and longer lead times for equipment. The top three life science markets have an oversupply of lab space, leading to record-high vacancies. The Bay Area has experienced negative net absorption, with more lab space becoming vacant than being leased. Conversions of labs to office spaces have decreased, while tenant-improvement allowances have increased by 38% on average since 2021. CBRE predicts in-progress lab construction will decline to pre-pandemic levels by 2026.
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CBRE Report: Post-Pandemic Slowdown Now Evident in Oversupply of Biotech Labs
