The city has a higher share of vacant life science space than any other part of the country due to a slowdown in venture capital funding, exposing challenges in the local industry that could worsen as the federal government plans cuts to research funding.
More than 40% of the city’s life science lab and office space was vacant during the fourth quarter of last year, according to a report released by real estate company Cushman and Wakefield. The spike in the vacancy rate, which is based on 13 life science buildings encompassing 3.9 million square feet of space, stems from the fact that the city has a small market and has opened new space in the past few years, according to Reed Hatcher, senior research manager at Cushman and Wakefield.
Other major life science hubs, including Boston and San Diego, have grappled with similarly high vacancy rates in recent months as new construction opens up, leading to a surplus of labs, the report found. Though the city has opened up new life science space, a lack of demand is driving current leasing challenges, with continued lags in venture capital funding that have slowed leasing activity for early-stage biotech companies, said David Stockel, broker at the real estate company CBRE.
“Buildings have significant vacancy,” Stockel said. “If we had a crystal ball, I’d imagine that a lot of those large blocks of vacancy are going to sit for some time.”
City life science companies struggled to raise money in the past few years because of a downturn in venture capital funds, Stockel said. Though some companies have had successful fundraising rounds, they’ve been careful to increase headcount or rent space because of continued economic uncertainty.
The industry faces new threats as President Donald Trump aims to cut funding from the National Institutes of Health. Although it’s too early to understand the impacts this could have on the industry, potential funding cuts could result in fewer emerging companies and life science innovations, Stockel said. New York’s network of universities and academic medical centers, which brought in $3.6 billion in NIH grants last year, is especially vulnerable to funding declines that could impact private companies.
That decline could also affect jobs. Although the local life science industry has grown to 88,000 workers in recent years, companies are still having challenges filling open positions. Nearly 3,000 life sciences companies sought to fill 20,000 jobs in 2024, with firms posting jobs sometimes three times on average, according to the report.
For now, companies are still leasing some space. Meta founder Mark Zuckerberg and his wife Dr. Priscilla Chan signed the biggest life science lease in 2024, taking up 46,000 square feet at 615 W. 131st St. for a biotech lab occupied by the Chan Zuckerberg Initiative space, according to the report. Perfume company Firmenich signed a lease for 18,000 square feet at 430 E. 29th St. and Mount Sinai took up 15,000 square feet at 619 W. 54th St.
New space is expected to come onto the market in the coming years. City officials recently advanced the Science Park and Research Campus in Kips Bay, a $1.6 billion project that has become the cornerstone of growth for the city’s life science industry. The project, which is being managed by the New York City Economic Development Corporation, will include two million square feet of life science space – half of which will be dedicated to private biotech companies – and is expected to create 15,000 jobs.
The Kips Bay project, in conjunction with a few other developments across the city, will help the city reach its goals to increase life science space and develop the local talent pipeline – a long-term investment for the industry, said Andrew Kimball, president and CEO of the city’s Economic Development Corporation.
“We have to think about how is this industry going to grow over a five, 10-year, 15-year trajectory,” Kimball said. “I would say overall, New York is doing quite well.”
