Life sciences design and construction: Navigating an evolving landscape

Venture capital sparks market momentum

After a period of slower growth, life sciences construction is showing signs of recovery. The reason? Renewed energy in the public equity market for biotech. With more venture capital becoming available, emerging life sciences companies are expected to ramp up their searches for lab and manufacturing facilities. Established organizations are also upgrading their spaces, fueling activity in laboratory design projects. 

Maldonado explained to Commercial Property Executives that demand will pick up in key life sciences market clusters as life sciences venture capital activity gains momentum. This trend should steadily work toward balancing the oversupply of life sciences real estate.  

“As financing conditions improve, the gap between available life science space and demand for it should begin to close, leading to a shift away from interim leasing strategies and a return to a focus on life science tenants. Lower borrowing costs will likely spur increased investment in life science projects, potentially revitalizing demand for lab spaces and reducing the need for landlords to rely on office tenants.” 

Landlord strategies to drive leasing

“As the market stabilizes, some property owners and landlords are adopting innovative strategies to address leasing and occupancy challenges,” Maldonado said. “While some landlords of life science properties are leasing small portions of space to traditional office users in newly built, vacant life science projects, others are diversifying their portfolios by incorporating flexible designs that can serve multiple purposes, including office use.”

Maldonado highlighted the importance of creating adaptable spaces that echo the needs of both life science and office tenants, allowing landlords the flexibility to pivot in response to changing market conditions. He noted that life science buildings with versatile layouts are not only easier to lease temporarily to office users, but they also contribute to greater financial stability for property owners.

Advancing life sciences construction

Recent growth in the life sciences real estate market, fueled by advancements in biotechnology, rising venture capital investments, and a robust talent pool, has solidified its place as a life sciences powerhouse.

“Prominent players in the biotech and pharmaceutical sectors, such as the Fred Hutchinson Cancer Center … along with major companies like Bristol Myers Squibb, AstraZeneca, Moderna, Gilead and Seagen, have firmly established Seattle as a leading life sciences hub,” Maldonado said. “This status is further enhanced by the city’s proximity to a major research institution, the University of Washington.”

South Lake Union, a hub for biotech innovation, continues to capture much of the demand for space, but surrounding areas such as the Eastside and First Hill are gaining traction as developers expand. Although 2024 saw a decrease in venture capital funding, the potential for lower interest rates could reignite investment. With over 9 million square feed of available space and vacancy rates exceeding 11%, there is significant opportunity for growth and innovation in Seattle’s life sciences real estate market.