Philadelphia’s life sciences market didn’t meet expectations in 2024, but hope springs eternal for the new year.
For the first time since the pandemic, Philadelphia experienced a negative absorption rate in the sector last year, according to Bisnow, courtesy of a year-end report by Colliers. Vacancies exceeded new leases by 140,000 square feet.
The urban market ended the year with roughly 1.5 million square feet of empty space and a vacancy rate of 33.8 percent. The regionwide vacancy rate is 8.8 percent, a five-year high.
Last year also brought a big drop in deliveries for the sector. Developers brought 200,000 square feet online in 2024, a fifth of the space brought to market in 2023.
The Colliers report pinned much of the negative data on uncertainty plaguing the sector in recent years. Interest rates remained elevated for much of the year and may not be poised to fall as far as previously expected in 2025.
More certainty could be on the way as Donald Trump returns to the presidency, though that’s far from a guarantee of a good thing for the life sciences sector. Investors and developers in the sector hope deregulation could make investments more appealing, but the murky future of agencies like the National Institutes of Health and the Food and Drug Administration could potentially sideline two major tenants in the sector.
Despite the uncertainty, the Colliers report is projecting a promising year for Philadelphia’s market, which is the fourth-largest in the country, behind San Francisco, Boston and San Diego. The report predicts 510,000 square feet of absorption next year and 1.25 million square feet of construction.
“The fact that we’ve got product in place means that we’ve got runway for the companies that I think are going to have a need for space,” Colliers’ Joe Fetterman said. “As we get out to 36 months, we may actually be in a position where we have demand for space.”