The first half of 2026 has offered mixed results for the life sciences sector of commercial real estate, according to data from Cushman & Wakefield.

The sector saw record merger and acquisition deals, an active initial public offerings market and strong venture capital funding. But all that activity didn’t translate into stronger real estate performance.

Net absorption in the second quarter declined 1.4 million square feet. The disappointing results came after two consecutive quarters of positive absorption. Overall vacancy rates rose 195 basis points from one year ago and now stand at 24.3%.

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The impact on rent growth was negative, with average rents falling 5.3% year over year to $64.17 per square foot in the second quarter. Sublease vacancies, however, declined by 20 basis points from one year ago to 3.4% as occupiers took space off the market.

Another bad sign for the sector is that vacancies increased and rents fell at a time when no new life science properties were delivered in the 12 markets tracked by Cushman & Wakefield. It is the first such quarter on record that no new properties have been delivered, according to the report.

Market softness is only expected to continue, as 5.6 million square feet of life science properties are under construction. The good news is that of the 4.5 million square feet of new space expected to be delivered in 2026, 72% has been preleased, showing the dominance of build-to-suit projects.

“Rents are expected to face further downward pressure as the market continues to absorb excess supply and demand remains in the early stages of recovery,” the report states.

Research and development property sales also slowed during the quarter to $1.3 billion, down 24% from last year’s second quarter. Property pricing showed strength, however, rising 7% year over year despite lower transaction volume.

Even considering the soft market for life science properties, Cushman & Wakefield remains upbeat, writing that sector fundamentals are gaining strength and will support future growth.

One reason for the optimism is the strength in venture capital funding, which reached $9.2 billion in the quarter, up 13% from the first quarter and 52% from one year ago. Investors tended to concentrate their money in fewer and larger transactions that targeted later-stage companies. The average size of deals reached a record $21 million, nearly double from one year ago.