2023 September Life Sciences Update

Uptick in Vacant Space Shifts the Sector into a Tenant Market

› Vacant space has steadily increased over the last 12 months. Overall vacant space averaged 8.4% during the pandemic period of 2020 to 2021; it now averages 11% across C&W markets, well below the overall U.S. office space vacancy rate of 19.2%. › The increase in vacant sublease space has applied upward pressure to the vacancy rate. On a YoY basis, total vacant sublease space grew from 1.6 million square feet (msf) to 5.1 msf. › A C&W analysis of subleases from 2020 to 2023 showed that newer Class A space leases faster than older Class B and C space by over a month; meaning that newer sublease space doesn’t last as long on the market. › A robust construction pipeline may contribute to the market’s vacant inventory, as much of the current pipeline is expected to deliver vacant. › The first half of 2023 has seen absorption turn negative in most markets following a long-term positive absorption trend Key Takeaway: The current tenant favorable market gives occupiers more options as they plan their space needs. However, strong underlying fundamentals mean this market opportunity will not last long.

Total Vacancy Rates by Components

Direct Vacancy

Sublease Vacancy

Average

35%

30.3%

30%

26.0%

25%

22.8%

20%

14.4%

15%

11.8% 9.8%

9.5%

11.0%

8.2% 8.1%

10%

7.2%

5.0%

4.1%

5%

3.2%

0.5% 0.3%

0%

Source: Cushman & Wakefield Research

9 / CUSHMAN & WAKEFIELD

LIFE SCIENCES SEPTEMBER 2023