Bay Area life science occupancy declines as venture capital funding recedes
Bar chart of Bay Area's life science VC funding with a line plot of life science space occupancy on the secondary axis.
- Venture capital funding for life sciences in the Bay Area has dropped significantly from its 2020-2022 peak, reflecting investor caution amid economic uncertainty and higher interest rates. This decline has contributed to slower leasing activity, increased sublease availability, and a more challenging funding environment for startups.
- The downturn in funding has resulted in a sharp decline in life science occupancy, now approaching 70%, its lowest level in years. This signals an oversupply of lab space, with many companies downsizing, delaying expansion, or putting space up for sublease. While overall funding has fallen, the San Francisco Peninsula continues to capture the largest share of VC investment, reinforcing its dominance as the region's life science hub. However, even here, demand has softened, contributing to rising vacancies across the market.
- The combination of rising vacancy rates, weak demand, and a substantial development pipeline suggests further headwinds in the short term. However, if funding begins to recover, particularly in AI-driven healthcare and biotech innovation, the Bay Area could see renewed activity in the latter half of the decade.
