The first quarter of 2026 did not show any significant improvements in occupancy across most markets. Despite this, it appears that construction activity is on an upward trend after hitting a low in mid-2025. The chart below compares the square footage of projects breaking ground compared to the inventory of operating properties. The high point was 11.6% in 3Q22, the low point was 2.6% in 2Q25, and the most recent number is 3.1%.
One of the largest projects that broke ground so far in 2026 is part of ARE’s Campus Point in San Diego. It is a 467k square foot build-to-suit research center for Novartis, expected to deliver in 2028. Considering San Diego’s oversupply issues, it is interesting that new massive projects are still moving forward. Revista is clocking San Diego life science at a 67% occupancy rate, yet we still see pharmaceutical companies opting to lease expensive new builds. This decision speaks to the specificity of space requirements, as well as the financial strength of Big Pharma. Unfortunately for life science landlords with high vacancy, these types of projects will continue to absorb the demand from high value tenants.
