Artificial intelligence is changing the way life sciences companies use real estate at a time when there’s millions of square feet of vacant lab space sitting on the U.S. market.
Biotech companies, like those in other industries, are using AI as a tool in the workplace. That’s leading these companies to take roughly a third less space per employee than they used to as they conduct experiments in silico — a fancy way of referencing computer simulations — rather than in physical lab space.
Those are some of the findings in JLL’s 2025 Life Sciences Real Estate Perspective and Cluster Analysis, released Wednesday, tracking 61 million square feet of available U.S. lab space on the market, three times the amount from four years ago.
Developers overbuilt lab and office space in the wake of the pandemic, leading to more than 220 life science properties across the United States that are 100% vacant, Travis McCready, JLL’s head of life sciences for the Americas, told CoStar News.
“Unlike the stressors on the office sector, which is essentially a behavioral issue that can be corrected by return-to-office mandates, the stressors in the life sciences sector is driven by a combination of factors,” said McCready.
Those factors include a lack of funding from venture capital, oversupply and “a shift in federal policy taking funding away from certain modalities,” said McCready, who is based in JLL’s Boston office.
The issues curbing demand in the life sciences industry, coupled with the AI boom, is expected to push landlords with vacant space to pivot to an alternative use for the real estate, McCready said. JLL projects that 18.7 million square feet of available U.S. lab space will likely shift to other uses by 2030.
“The current oversupply situation represents both the culmination of an unprecedented supply cycle and the beginning of a fundamental alteration in how life sciences companies approach real estate,” McCready said. “Companies and markets that adapt to these new realities will emerge stronger and more competitive.”
‘Stick to Your Knitting’
Boston maintained its position as the nation’s top market for life science, according to JLL’s report, followed by the San Francisco Bay Area and San Diego. However, future success depends on a market’s ability to foster early-stage company formation and growth, JLL said.
For landlords in life science hubs, which also includes North Carolina and the Mid-Atlantic region, McCready said he’s telling property owners to “stick to your knitting” and continue to invest in the sector.
But landlords in secondary and tertiary life science markets should look at ways to pivot their vacant real estate to other tenants and uses, he added.
“At some point, you have to cull the herd,” he said.
Like all real estate, each landlord’s pivot should depend on the property and the market where it sits, McCready said. Even so, JLL is projecting that changes could include everything from a repositioning to an adaptive reuse.
“On one hand, the oversupply is a big problem,” he said. “But if you turn the prism a little bit, it’s also an enormous opportunity for early-stage biotech companies to find space at price points that are very competitive.”