2025 Life sciences real estate predictions

As we commence 2025, for those who are considered leaders or visionaries in their fields, it’s time to dust off the crystal ball and make some bold predictions about what this year will bring.

While I’m hardly a fortune teller, I do have more than two decades of experience in commercial real estate investment, particularly in the life sciences vertical. Suffice it to say, healthcare and commercial real estate are two industries that have seen major shifts in recent years (think remote work and telehealth). Of course, not all industry changes have to be that jolting to shake things up, but we can expect some interesting shifts that will largely impact the life sciences commercial real estate space.

Here’s what I believe we’ll see in 2025:

Stabilisation and growth

Although Boston, San Francisco, and San Diego are the top three life sciences markets in the US, they are burdened by an oversupply of lab buildings that offer lab space. There is an undersupply of manufacturing space and other amenities that life science companies want and need to grow.

I predict many life sciences companies will not only be looking for space in markets with a long-standing history of pharmacological and technological discovery and innovation; they will also seek out spaces to grow and satisfy all ends of their business. These companies will not only need to find the proper facilities for their research and development efforts, they will also need to be able to tap into a large highly skilled workforce.

I think New Jersey is poised to take advantage of this dynamic, as it is a state currently home to over 3,000 pharmaceutical and biotechnology companies and a significant number of clinical research and contract development manufacturing organisations. New Jersey has the real estate assets to satisfy tenants’ needs, as well as the capacity to grow tenants' needs for manufacturing on the product development side of the business. Also, its geographic location (e.g., proximity to major markets and ports) makes it ideal for logistics and supply chain support.

A focus on repurposed spaces

As Mark Twain once said, “Buy land. They aren’t making any more of it.”

Ultimately, land is a finite resource, especially in urban areas, making new construction and expansion both difficult and prohibitively expensive. That’s why I think we’ll see more and more life sciences companies relocate their headquarters to areas with existing infrastructure, where they can easily repurpose space on a mixed-use campus (think office, lab, and manufacturing).

The Northeast Science and Technology (NEST) Center is one example of this. Formerly the site of Merck’s former global headquarters in Kenilworth, New Jersey, NEST is a 100+ acre research and development campus with over two-million square feet of existing facilities, including laboratory and bio manufacturing buildings, as well as redevelopment opportunities.

Repurposing older infrastructure can align with sustainability goals, which is increasingly a priority for life sciences companies.

Increased demand for data processing capabilities

AI and machine learning already play a significant role in research and development in the life sciences space – and that’s only going to accelerate. To keep pace with the demand, we’ll see a surge in robust data processing centres.

As AI becomes even more integral to the industry, a higher level of computational power will be required to analyse the vast amounts of research data. I foresee data centres becoming standard amenities at life sciences and research centres.

Increased data processing capabilities will not only enhance research and development, but also streamline clinical trials or patient outcomes research.

Increase in companies onshoring their operations

Potential regulatory and policy shifts, like the pending Biosecure Act, will drive more US companies to onshore their research and development efforts, especially as foreign biotech operations, particularly in China, come under increased scrutiny. This will strengthen national supply chains or foster domestic job growth in biotech manufacturing.

Domestic contract research organisations and manufacturers stand to benefit from this shift. A new regulatory environment will lead to consolidation efforts as companies aim to centralise operations in a more secure and stable US-based locations. In the coming years, this is likely to reshape the landscape for biotech and life sciences hubs across the country, especially locations that can adapt to the changing landscape. US-based operations could promote collaboration with academic institutions or government agencies in innovation hubs.

Assuming these four predictions come to fruition, it will be an exciting time in the life sciences real estate sector. We’ll see enormous potential for improved operational efficiencies, more innovative work environments, and groundbreaking advancements in healthcare.