Cushman & Wakefield: U.S. Life Sciences Market Moves Toward Rebalancing as Capital Returns and New Development Slows

NEW YORK, August 31, 2026--The U.S. life sciences real estate sector is moving toward a gradual rebalancing as development activity contracts, investment sales recover and funding conditions strengthen, according to the latest Life Sciences Update from Cushman & Wakefield. While elevated vacancy and softer rents continue to weigh on near-term fundamentals, a reduced construction pipeline and improving demand indicators are positioning the market for healthier long-term growth.

U.S. life sciences asking rents averaged $64.17 per square foot (psf) in the second quarter of 2026, down 2.2% quarter-over-quarter (QOQ) and 5.3% year-over-year (YOY). Despite the decline, life sciences rents remained 37% above traditional office rents across the 12 major markets tracked by Cushman & Wakefield.

Vacancy remained elevated as the market continued to absorb recently delivered space. The overall U.S. life sciences vacancy rate increased from 23.4% at year-end 2025 to 24.3% in Q2 2026. However, sublease vacancy edged down to 3.4%, while Chicago and Raleigh-Durham recorded meaningful declines in overall vacancy as stronger absorption helped reduce available space.

"The U.S. life sciences market is moving through a necessary period of adjustment as it absorbs the significant amount of space delivered in recent years," said Sandy Romero, Head of Office and Alternative Insights at Cushman & Wakefield. "The slowdown in new construction is an important step toward bringing supply and demand back into better balance."

The construction pipeline has contracted sharply from its 2023 peak. Less than 6 million square feet (msf) is currently under construction, representing just 2% of existing inventory, compared with 35 msf in 2023 when projects under construction represented 17% of total inventory. Approximately 4.4 msf is scheduled for delivery through 2027, with 69% already preleased.

The shift toward more demand-driven development is becoming increasingly evident. Half of the tracked U.S. markets currently have no space under construction, while build-to-suit projects account for a growing share of the remaining pipeline. Of the 4.1 msf expected to deliver by year-end 2026, 72% is already preleased, limiting the amount of new speculative space entering the market.

Capital Markets Show Signs of Renewed Momentum

Capital markets are also showing signs of renewed momentum. U.S. R&D sales volume topped $9.3 billion over the four quarters ending in Q2 2026, up 4% YOY, while the number of transactions increased 9% YOY. Average deal size declined 5% YOY, reflecting a measured recovery in investment activity.