— By Chris High, Steve Bruce and Conor Evans of Colliers —
We’re in the middle of a market recalibration. On the office side, leasing has slowed significantly, with tenants downsizing footprints and pushing for shorter terms as hybrid work remains a dominant driver. In life sciences, we saw explosive growth from 2020 to mid-2022, but that pace has tapered off. VC funding is more selective, and some developers who stretched to convert commodity office and flex properties into lab space, often with less-than-ideal infrastructure, during the boom years, are now rethinking those strategies.
Still, demand for high-quality, fitted lab space remains, especially in well-located projects by experienced owners like Longfellow, BioScience Properties, Sterling Bay, Healthpeak, BioMed, and ARE. These firms are adapting with thoughtful repositioning and delivering product that aligns with where tenant demand is today.
In the near term, we expect continued headwinds. Commodity office space will face pressure on rents and absorption, while high-end life science campuses with strong sponsorship will be better positioned to attract demand. We expect Life Science to rebound in the next 12 to 18 months as capital markets settle and merger/acquisition (M&A) activity returns. Distressed office sales may continue as debt maturities hit, which could open the door for new investment and repositioning plays.
New developments in Sorrento Mesa are shaping the next chapter of San Diego’s market. Longfellow’s numerous campuses all deliver highly amenitized lab space designed for today’s hybrid and innovation-driven workforce. Sterling Bay, BioScience Properties, and Trammell Crow are also advancing new projects in the submarket.
These additions, alongside Alexandria’s continued expansion and IQHQ’s RaDD project downtown, are a test of market absorption at scale. The outcomes will have ripple effects on how developers evaluate timing, project scope, and spec versus build-to-suit strategies. Purpose-built life science projects have been outperforming conversions, capturing the demand of larger, active tenants in the market.
Sorrento Mesa is one of the most active submarkets, with its accessibility, relative affordability, and existing infrastructure making it especially appealing to growth-stage life science users. Torrey Pines remains San Diego’s flagship life science cluster, driven by its proximity to top research institutions and the prestige of being the birthplace of the region’s life sciences industry. UTC continues to see strong interest due to its density, lifestyle offerings, and proximity to UCSD. We also see interest in “light lab” options as companies seek value-oriented and functional alternatives.
Longfellow Real Estate Partners is one of the most active and influential players in the San Diego market, with a strong pipeline in Sorrento Mesa and beyond. They’ve demonstrated a long-term commitment to life science and innovation tenants with best-in-class campuses. Alexandria continues to lead in Torrey Pines and UTC, while IQHQ is redefining the urban life science landscape downtown with RaDD. Breakthrough Properties, Healthpeak, and Trammell Crow are also shaping the region’s future with institutional-grade projects and deep capital backing.
It’s an opportunistic moment for tenants. Office users have leverage across the board; even in life sciences, tenants can be more selective. Owners are responding with flexibility — offering turnkey lab spaces, substantial tenant improvement and concession packages, and thoughtful design focused on employee experience and retention. That said, lab infrastructure remains expensive, and groups with solid funding and clear programming continue to get prioritized.
It’s a great time to be a tenant, particularly in the office sector, but increasingly in life science as well. A combination of quality sublease availability, extended lease-up timelines, and greater capital discipline is pushing landlords to compete more aggressively. Still, projects by proven sponsors that offer location, amenities, and delivery certainty, are performing better and commanding stronger economics.
Office vacancy sits in the 10-15 percent range overall, depending on submarket and building class, with downtown currently hovering around 31 percent. Life science direct vacancy is in the high teens, but effective availability is materially higher when you factor in sublease and underutilized space. Rental rates have pulled back roughly 10 percent from peak, with more softness in commodity products. Best-in-class projects — particularly newer builds — are holding steadier, driven by quality, infrastructure, and fit-to-market design.
Concessions are generous across both office and lab sectors. We’re seeing 6–12 months of free rent on five to seven-year deals and TI allowances north of $300/SF from shell in some cases for lab. Owners are leading with flexibility, whether through phased occupancy, early access, or creative solutions to manage upfront costs for tenants. Office TI packages are also trending higher, particularly for credit tenants willing to sign longer-term. It’s a highly competitive environment, and landlords are adapting to meet demand.
— By Chris High (Vice Chair and Co-Lead of Southwest Life Sciences), Steve Bruce (Vice Chair and Co-Lead of Southwest Life Sciences) and Conor Evans (vice president) of Colliers. This article was originally published in the June 2025 issue of Western Real Estate Business.