BOSTON, Mass. — Boston has regained its position as the nation’s leading life sciences market, marking a potential turning point after two years of slower growth, according to Avison Young’s latest H2 U.S. Life Sciences report.
The brokerage found that Boston and the Bay Area once again led national leasing activity in 2025, together accounting for roughly half of all U.S. life sciences leasing. Measured more broadly, the two regions captured about 70 percent of total lab leasing demand last year, reflecting what the report describes as a renewed “flight-to-core” strategy among tenants seeking established research ecosystems, deep talent pools, and reliable access to capital.
Leasing activity nationwide remained below pre-pandemic averages from 2015 to 2019, underscoring continued caution among biotech and pharmaceutical companies. Still, 2025 represented the strongest year for leasing demand since 2022, with more than 3 million square feet of lab and R&D space transacted across major U.S. markets.
Boston posted one of the strongest recoveries among lab hubs. A resurgence in venture capital investment into Greater Boston life sciences firms, along with several high-profile expansions and portfolio consolidations, helped stabilize conditions. Availability rates began leveling off for the first time in the current cycle.
“The current environment is creating a rare window where companies can secure premier lab space in Boston with more flexibility and better economics than we’ve seen in years,” said Tucker White, U.S. Life Science Lead, Market Intelligence at Avison Young. “That dynamic is already translating into renewed leasing velocity.”
The rebound in leasing coincided with a surge in biotech funding. The report noted that 2025 marked the strongest year for venture capital investment in the sector since 2021, with Boston- and San Diego-based firms capturing roughly 66 percent of total VC dollars. While most funding flowed to Series A and B rounds, seed and pre-funding activity also picked up, signaling renewed company formation and a strengthening innovation pipeline that could drive future lab demand.
Even as demand improves, supply remains elevated. Greater Boston recorded negative net absorption of 2.86 million square feet in 2025 — its first annual decline since 2011 — largely due to sublease availability, footprint consolidations, and some company bankruptcies. About one-third of the region’s life sciences inventory is now available for lease, creating a pronounced supply-demand imbalance. Similar availability levels persist in other major hubs, including the Bay Area and San Diego.
That surplus, however, is creating opportunities for tenants. Larger blocks of space and increased sublease offerings are providing discounted entry points for growth-stage biotech firms seeking high-quality lab space in prime locations.
Meanwhile, new construction has slowed sharply. After peaking at approximately 13 million square feet in 2022, development dropped to 3.2 million square feet by the end of 2025, with no new projects breaking ground during the year. The pullback reflects muted demand and higher construction costs, and it may lay the groundwork for tighter market conditions in 2026 as excess inventory is gradually absorbed.
Avison Young said overall availability has begun to stabilize, suggesting the market could be nearing an inflection point. If leasing momentum and funding gains continue, conditions may tighten next year. While rent growth is expected to remain modest in the near term, the firm said Boston appears well-positioned for renewed expansion in 2026, supported by stabilizing tenant demand, improving capital flows, and favorable lease economics in one of the country’s most established life sciences ecosystems.
