JLL: Europe’s life sciences lab oversupply fears are overblown

Europe’s life sciences property market is entering a new growth cycle and fears of a prolonged laboratory oversupply are overstated, according to new research from JLL. It expects demand and supply to converge across the continent’s leading science clusters over the next few years.

The adviser said recent concerns about rising laboratory availability in major hubs should prove temporary, with oversupply largely limited to short-term, localised imbalances rather than the structural correction experienced in the US. It expects occupier demand to strengthen through 2026, supported by improved financing conditions, rising venture capital investment, increased mergers and acquisitions activity and growing public-sector support for the sector.

JLL, a US-based commercial real estate services firm, said Europe is entering a more measured phase of growth after a period of weaker occupier demand and rapid development activity. The firm argued that several factors will help restore market balance, including slower development pipelines, substantial pre-letting requirements for new projects, the removal of obsolete secondary stock and greater flexibility in building use.

Europe’s primary markets are set to face moderate supply-demand imbalances following subdued occupier demand in recent years. However, JLL expects the gap to narrow as deliveries slow and corporate expansion resumes.

The firm contrasted Europe’s position with the US, where investor-led laboratory development expanded rapidly during the previous cycle. Between 2021 and 2024, the three largest US life sciences markets – Boston, San Diego and the Bay Area – added 3.5 million sq m of new laboratory space, representing a 48% increase in stock. Over the same period, Europe’s three most mature markets – Oxford, Cambridge and London – delivered just 160,000 sq m of new space, a 30% increase.

JLL said the US entered the previous growth cycle with an established investor-led laboratory market that could respond quickly to surging occupier demand. Europe, by contrast, started from a much smaller base and therefore faces a more gradual adjustment process.

As a result, the adviser expects rental growth to slow or pause in some locations but does not anticipate the significant downward correction seen in parts of the US laboratory market.

The report also identified growing signs of recovery across the wider life sciences sector. Public pharmaceutical and biotechnology markets have performed strongly despite geopolitical uncertainty, helping companies access capital on more favourable terms and supporting future real estate demand.

Venture capital activity is also improving. European life sciences companies raised $14.6 billion in 2025, marking a second consecutive year of growth, with a 7% year-on-year increase following a 22% rise in 2024. JLL noted that AI-driven drug discovery companies accounted for 20% of all European life sciences venture capital investment last year.

The adviser expects the strongest future laboratory leasing activity to remain concentrated in established science clusters. Cambridge and London are forecast to generate more than 15,000 sq m of annual laboratory take-up, while Oxford, Basel, Munich, Paris, Berlin-Potsdam, Barcelona, Medicon Valley and Stockholm-Uppsala are expected to record annual demand of 10,000-15,000 sq m.

It also highlighted the growing influence of artificial intelligence on occupier location strategies. It said future demand will increasingly favour clusters that combine specialist scientific talent, leading research institutions, venture capital ecosystems and advanced real estate infrastructure.

London and Paris were identified as leading centres for AI talent, while Oxford, Cambridge and ETH Zurich were highlighted for their academic strengths.

Despite the improving outlook, the report warned that Europe continues to face structural challenges in attracting and retaining pharmaceutical research and development investment. Europe’s share of global Phase 1-3 clinical trial starts has declined significantly over the past 15 years, while China has expanded rapidly. It cited regulatory inefficiencies, clinical trial capacity constraints and drug-pricing pressures as factors weighing on competitiveness.

Nevertheless, the adviser said Europe remains well positioned to benefit from the next phase of industry growth. It argued that stronger capital availability, a recovering funding environment and increasing corporate demand for flexible research facilities should support leasing activity and investment performance across the continent’s leading life sciences clusters over the coming years.