2024: A Year of Decline for Philadelphia’s Life Sciences Sector
Philadelphia’s life sciences market faced a challenging year in 2024, failing to meet expectations and experiencing its first negative absorption rate since the pandemic, according to a year-end report by Colliers cited by Bisnow. The sector saw vacancies exceed new leases by a notable 140,000 square feet.
The urban life sciences market closed the year with approximately 1.5 million square feet of unoccupied space, resulting in a staggering vacancy rate of 33.8 percent. On a regional scale, the vacancy rate climbed to 8.8 percent, marking a five-year high. Additionally, new deliveries in 2024 were significantly reduced, with developers introducing only 200,000 square feet of new space—just one-fifth of what was delivered in 2023.
The report attributed much of this downturn to the uncertainty plaguing the sector in recent years. Elevated interest rates persisted throughout 2024, and while expectations for a rate drop in 2025 remain, they may not be as substantial as initially hoped.
Uncertainty Looms Amid Political Changes
Looking ahead, the Colliers report highlighted the potential impact of political changes as Donald Trump returns to the presidency. While some investors in the life sciences sector hope deregulation under his administration could create a more appealing investment climate, uncertainties regarding key federal agencies cast a shadow.
The future of organizations like the National Institutes of Health (NIH) and the Food and Drug Administration (FDA)—two significant players in the life sciences field—remains unclear. Any potential shakeups within these agencies could disrupt the sector, leaving key tenants on the sidelines.
Despite these uncertainties, industry stakeholders remain cautiously optimistic. Experts believe that streamlined regulations could help stimulate investments and development in the life sciences market. However, they acknowledge that the sector’s growth hinges on how these political and regulatory dynamics unfold.
Optimism for 2025 and Beyond
Despite the setbacks of 2024, Philadelphia’s life sciences market is poised for a rebound. Colliers projects a brighter 2025, forecasting 510,000 square feet of absorption and 1.25 million square feet of construction. These numbers position Philadelphia as the fourth-largest life sciences hub in the United States, trailing only San Francisco, Boston, and San Diego.
Joe Fetterman of Colliers expressed optimism for the market’s future. “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,” he said. “As we get out to 36 months, we may actually be in a position where we have demand for space.”
With new projects on the horizon and demand expected to increase over the next three years, Philadelphia’s life sciences market may be on the cusp of a recovery, reaffirming its role as a key player in the national life sciences landscape.
