Trade Wars, Funding Cuts Choke Boston’s Life Sciences Market

A few years ago, the life sciences market boomed, particularly in the Boston area. Not so much anymore — and that’s negatively impacting the city’s real estate.

The lab vacancy rate in the greater Boston area soared to 25 percent in the first quarter, Banker & Tradesman reported. Negative absorption in the market hit 640,000 square feet, according to a first-quarter report from CBRE.

There were 927,000 square feet of life science leases signed in the first quarter, but more than half of that volume came via a single lease, Biogen’s 580,000-square-foot lease at the Volpe Center in Kendall Square.

Researchers with the commercial brokerage posited the possibility of trade wars and cuts to research funding as a primary reason for the market’s retrenchment.

“A number of large pharmaceutical companies experienced scale-backs in market capitalization once the new administration announced the potential for these tariffs,” CBRE wrote. “A pullback in NIH funding could potentially cause clinical trials to pause, as well as reduce research institutes’ need for lab space across the region.”

The pullback was felt strongly in Boston proper. In the first three months of the year, only a single deal was closed in the entire city; Nanite signed a 10,000-square-foot lease at the Innovation and Design Building on Drydock Avenue in the Seaport District. The city’s negative absorption for the quarter was 124,000 square feet, while sublease availability reached 4.9 percent and availability rate as a whole jumped to a staggering 38 percent.

Areas outside of the city center are not being spared. East Cambridge, which drew 62 percent of the market’s leases in 2023 and 2024, saw 118,000 square feet of negative absorption in the first quarter and an availability rate that climbed to 11.7 percent.

Two of Cambridge’s largest leases of the quarter actually represented consolidations for the tenants.

The vacancy rate in the regional market may be poised to rise, too. Greater Boston leads the nation with 4.7 million square feet of new construction, according to data from Colliers.

— Holden Walter-Warner