Life Sciences Market Trends Q2 2026

The life sciences market remains optimistic, supported by continued momentum in manufacturing, steady clinical trial activity and FDA approvals, active M&A, and new investments in AI-enabled research investment aligned with long-term pipeline strategies.

While R&D opportunities exist, activity remains constrained by disciplined capital investment, real estate oversupply, and funding headwinds. Manufacturing remains the industry anchor as projects announced in 2025 move into the project execution phase, in an increasingly competitive construction sector – demand continues for biologics, API and drug product capacity.

Looking beyond 2026, anticipation of the “2030 patent cliff” continues to shape our industry as companies prepare for a loss of product exclusivity and forecasted revenue impacts, especially for high revenue blockbusters. M&A and portfolio reshaping is happening now with both near- and long-term market implications. While the overall impact to the A/E and construction industry is still taking shape, we are confident with every challenge is an opportunity to ultimately benefit patients and the industry.
 

The R&D market remains innovative but continues to face funding and vacancy surplus headwinds, especially in the established hubs of Boston, Bay Area and San Diego. Investment continues to be driven by biopharmaceutical investment to support M&A, pipeline advancement, and AI-driven drug discovery in lieu of speculative investment. 

Private and federal funding remains in flux with industry focus on supply chain resilience in the U.S. manufacturing sector. Securing other capital remains challenging in the current environment. Vacancy surplus remains, stalling the real estate market with limited uptake of existing inventory which continues to fuel a tenant driven market.

With that said, opportunities are presenting themselves both in established and emerging markets but at historically lower levels—we are seeing a positive uptick in market activity compared to last year. These opportunities are highly targeted, focusing on pipeline strategies with tenant specific requirements and adaptive reuse rather than ground up construction. 

While the stall in construction investment continues, long term innovation and investment drivers remain intact—driven by clinical trial activity and approval, AI based research investments and advances in modality research. The uncertainty is when R&D demand will rebalance with market conditions.

While we have not seen the 2026 new investment announcement activity that we saw in 2025, there continues to be some increase to nearly $550B announced last year. As part of the ramifications of these announcements, we are continuing to see strong large project starts in the southeast and northeast US, specifically from New Jersey down through North Carolina. Additionally, although more sporadic, there is real activity from Georgia westward to Alabama and Texas in developing geographies not accustomed to this type of work. Labor resource challenges in traditional manufacturing markets continue to exist, so seeing expansions into emerging territory is understandable.

While ongoing material and equipment supply chain challenges remain (pressures from other markets, i.e. data centers), most challenges can be anticipated and therefore become a scheduling effort in lieu of unmitigated project surprises. We continue to encourage our clients and partners to make plans and major decisions as early as their projects allow.
 

Labor continues to be a priority within the construction industry.

• Labor competition between growing tech and life sciences markets, each requiring highly technical resources from limited trade pools.
• Large projects, specifically in manufacturing, are outpacing the growth of resources needed to design, construct and operate these facilities.
• In certain geographic markets many trade partners are challenged in selecting more short-term lucrative work vs more diverse work in their portfolios.
• Aging workforce and decreased attraction of talent in the construction industry.
• Over-saturation in established markets, new remote regions and emerging markets are either overwhelmed with work or do not have the local trade expertise. Resource limitations continue around power supply, water, etc.

AI and Digital Twin impacts in early drug development is a hot topic. The ability to analyze big data is ever increasing the customized design and testing of compounds virtually, at a fraction of the traditional cost and schedule.

Ongoing investment from private and government agencies combined with expanding collaboration between the biotech, universities, and healthcare markets is exponentially increasing the ability to virtually predict the efficacy of new therapies. It is truly an exciting time.

Photo by: Kevin Brown