US sees 185% jump in tenant demand for biomanufacturing space, as lab leasing craters
The U.S. saw a 185% spike in demand for biomanufacturing space over the past six months, as large pharma companies and contract development and manufacturing organizations (CDMOs) looked to expand their domestic operations, according to a new report from commercial real estate and investment management company JLL.
Driven by the Trump administration’s threat of pharmaceutical tariffs and other cost pressures, JLL’s report notes that 15 major pharma companies have so far announced more than $270 billion in U.S. biomanufacturing and R&D investments planned over the next five to 10 years.
President Trump has repeatedly threatened to impose tariffs on pharmaceuticals to pressure drugmakers to bring manufacturing back to the U.S. It’s a threat that appears to be working with some Big Pharma companies including AbbVie, Bristol Myers Squibb, Eli Lilly, Gilead Sciences, Johnson & Johnson, Novartis, Roche, Sanofi, and Takeda — all of whom have recently pledged billions of dollars in U.S. investment.
“Large and public commitments by global pharmaceutical companies is off the charts,” Mark Bruso, director, Boston and national life sciences research at JLL, said in a statement. “Even if it takes a while to materialize, it is undoubtedly an unmitigated tailwind for the manufacturing sector.”
JLL contends that while an undetermined number of those investment commitments will wind up on pharma-owned campuses, the firm said it has seen a significant spike in touring activity for built biomanufacturing space in key U.S. markets.
“While the pullback in public funding is great cause for concern and a supply shake-up is on the horizon, the desire to strengthen the supply chain, geopolitical factors, patent and data security concerns and uncertain tariff landscape have all sparked strong interest in domestic pharma manufacturing,” Travis McCready, head of industries, leasing advisory and chair, global life sciences advisory board at JLL, said in a statement.
Given that the U.S. is the world’s biggest importer of pharmaceuticals, life sciences companies are more likely to incorporate reshoring into their long-term strategies, according to Kevin Wayer, division president, global-life sciences at JLL.
Lab leasing volume craters
Although pharmaceutical reshoring offers a bright spot in the current business environment, U.S. lab leasing declined significantly in the first quarter of 2025, according to the report.
“Lab leasing volume experienced a notable slowdown in early 2025, dropping from its promising growth trajectory seen in 2024,” states the report. “The current market conditions reflect a cautious approach by life sciences companies in their real estate decisions, influenced by macroeconomic, policy, and funding uncertainties.”
JLL believes the industry trend is poised to continue, noting that the reductions in tenant demand in early 2025 across the U.S. “suggest muted leasing volume growth for the rest of the year as the sector grapples with a rocky decision-making environment.”
The U.S. lab market, which currently totals 200 million square feet, would require between 20 million square feet and 25 million square feet of net absorption or supply reductions to return to equilibrium, according to the report.
“It would take three times the uptake of space seen per year during the peak of the last cycle to reach equilibrium,” Maddie Holmes, senior research analyst, life sciences industry insight and advisory at JLL, said in a statement.
The sustained period of oversupply in the U.S. lab market has resulted in elevated vacancy levels, forcing many struggling buildings to consider changing uses, according to JLL, which has observed a net reduction of 1.2 million square feet in built lab space across 13 buildings over the past four quarters — part of the 3.2 million square feet that has changed or is in the process of changing uses.
The report found that Boston, the San Francisco Bay Area, and San Diego are “exhibiting comparable market conditions in the face of prolonged oversupply and weak demand” with availability rates remaining elevated and leading to significant downward pressure on rents.
However, midsize markets such as Greater Washington, D.C., New Jersey and Raleigh-Durham, North Carolina “occupy a more stable middle ground, displaying decent availability levels and relatively moderate rent changes,” finds JLL.
“The geographically fragmented Los Angeles market is a clear outlier,” according to the report. “Its single-digit availability rate has been a catalyst for rent growth as tenants struggle to find growth space.”
