Los Angeles Lab Lease Rents Rise Amid Nationwide Slump

Lab space is seemingly in high demand in Los Angeles as the city sees rising rent rates amid a nationwide slump.

A new report from JLL found that lab leasing fell sharply in the first quarter of this year, with 60 in the first quarter compared to around 120 deals closing in the fourth quarter of 2024, L.A. Business First reported. Total lab vacancy in L.A. is around 2 percent — the only single-digit figure across the country, including research hubs like Boston and the Bay Area.

Still, that doesn’t mean it’s the worst it has ever been. Total lab lease volume in the U.S. in the first quarter remained above the pre-pandemic average, with sublease volume being the highest it’s been in at least a decade. Newer, purpose-built facilities are the most popular of these properties.

“The geographically fragmented Los Angeles market is a clear outlier. Its single-digit availability rate has been a catalyst for rent growth as tenants struggle to find growth space,” the JLL report says.

L.A.’s life sciences market saw an uptick through 2024 before falling off in the first quarter. JLL attributes the drop to “a cautious approach by life sciences companies in their real estate decisions, influenced by macroeconomic, policy and funding uncertainties.”

In the face of funding cuts, tariffs and other economic question marks, most of those companies are opting for smaller spaces instead of betting big. Of the deals closed in the first quarter, 76 percent were for spaces of 30,000 square feet or less.

As tenant demand across the country has dropped, so too has rent in most places. Rental rates dropped in six out of 11 major markets in the first quarter compared to the fourth quarter of last year as vacancies in markets like the Bay Area, Boston, New Jersey and San Diego hovered around 30 percent.

Meanwhile, in Los Angeles, rents for such spaces rose about 5 percent. The city has an inventory of about 11.8 million square feet of life sciences space with average asking rent of around $50.76 per square foot.

JLL predicts a soft rest of the year for the life sciences market across the country as L.A. remains the hotspot for lab lease activity. Biotech companies like Spatial Genomics, AgriProtein and Aadi Bioscience are among those that have set up shop in Greater Los Angeles.

“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,” JLL said in the report.

— Chris Malone Méndez