Alexandria Real Estate Equities signaled a possible national rebound in biotech property by racking up 1.2 million square feet in leases in the fourth quarter, nearly doubling the real estate investment trust's average of the past five quarters.
The nation’s largest holder of life science lab and office properties, with more than 50 million square feet across regions like Boston, San Francisco and San Diego, marked its best leasing quarter of 2025 and posted 10% above the average for the past eight quarters. Executives reiterated plans to sell buildings and land that don’t support its primary focus on newer, large multitenant campuses.
The Pasadena, California-based REIT reported $1.5 billion in property dispositions across 26 transactions in the fourth quarter, as it continues to focus resources on large campuses rather than standalone buildings in key life science regions.
The REIT expects 2026 occupancy for its portfolio to remain close to 90%. Space take-up could dip in the first quarter as some leases expire, but leasing momentum should pick back up in the second half as spaces get backfilled and newly built projects come online, Alexandria officials said.
“Our team continues to navigate a challenging macro-industry regulatory environment,” Alexandria Chief Financial Officer Marc Binda told analysts during a quarterly earnings call Tuesday.
Company founder and Executive Chairman Joel Marcus said biotech demand in 2026 will be affected by factors including venture funding for early- and mid-stage firms that has slowed in the past year along with initial and secondary stock offerings.
Another variable is whether drug approvals are slowed by ongoing management changeover at federal drug and healthcare agencies, though approvals generally maintained a steady pace in 2025, Marcus said.
Global pharma firms boost leasing
Continuing a longtime trend, company officials said the majority of Alexandria's leasing activity during the past year, 82%, was generated by its existing tenant base, including several global pharmaceutical firms now seeing increased space demand, particularly on the manufacturing side.
Alexandria officials previously said drug manufacturing has so far not played a large part in its current property mix — comprising primarily labs and offices — or future development pipeline. But several major pharmaceutical firms during the past year announced plans for new U.S. manufacturing plants designed to minimize import tariffs by increasing domestic production.
Those investments in total represent more than $300 billion over the next decade. A report this week from brokerage Newmark said biotech-related U.S. manufacturing facility investments implemented during the past two years, at nearly $50 billion, paced 80% higher than all capital expenditures announced from 2020 to 2023.
Nearly every U.S. region recorded at least one significant facility announcement in 2025, led by the Northeast and South. “The investment surge is a clear green shoot for the broader life science sector, beset by the significant headwinds in recent years,” Newmark researchers said.
According to several brokerages, biotech demand slumped in the immediate aftermath of the pandemic as companies changed research and development priorities. That prompted small and midsize firms in particular to vacate space or pull back on plans to expand labs and offices, causing vacancies to rise in several regions.
Slowing biotech construction has helped vacancies decline over the past few months, but they remain above pre-pandemic levels in the largest biotech regions.