The life science sector in New York City is filled with plenty of encouraging signs — but some activity is lagging. A market report from CBRE finds that leasing volume in 2024 plunged by 60 percent to 158,000 square feet. That represents the category's lowest yearly level since 2020.
Lab space tumbled by 13 percent to 531,000 square feet, while the number of requirements dropped to 22, from 25. That came "as many tenants are hesitant to reenter the market for lab space amid economic uncertainty and [took] a more conservative approach to capital outlays," said CBRE.
CBRE said that demand for lab space was higher between 2019 and 2021 — and NYC made investments to address the needs, but the market has slowed down since and an influx of supply has entered the market. Overall, lab inventory sat at 3.4 million square feet, as of the end of 2024.
While there was some weakness in the life sciences sector, the positives can't be overlooked. For example, lab exclusive rents on average spiked by nine percent to $106.91 NNN per square foot. Lab exclusively in Manhattan, rents surged by 14 percent to $123.10 per square foot, representing an all-time high for the category.
"The increase was mostly due to below average-priced lab exclusive space shifting to a lab capable offering and upward repricing at some buildings," CBRE said.
Also, venture capital funding was strong, as the category more than doubled to hit $1.83 billion in 2024. That's significantly above the median of $1.50 billion recorded between 2017 and 2021. The number of deals, however, remained the same at 66. Some of the biggest fundraisers were recorded by Helaina ($45 million) and Graviton BioScience ($25 million).
NIH funding remained flat at $2.58 billion.
Occupancy was strong, as ready, built availability declined by 130 basis points to 9.4 percent. However, the Manhattan rate for the category was 5.6 percent, marking a record high for the city.
NYU Langone/BioLabs posted the top lease deal of 2024 in NYC's life science sector thanks to its absorption of 46,179 square feet. It was followed by Chan Zuckerberg BioHub and Confidential Tenant, which took 37,480 square feet and 18,120 square feet, respectively.
Overall, while rate cuts represented a positive sign in 2024, they have yet to have an impact on at least leasing activity in NYC's life science sector. Heading into 2025, CBRE cities headwinds that could come into play for the market. This includes not only the high supply — but NIH funding could be at risk of getting cut under the new Trump Administration, which could impact the industry. As of now, there are unknowns.