Alexandria’s $73M Quarterly Loss Highlights Deepening Life Sciences Real Estate Slump
Alexandria Real Estate Equities posted another bruising quarter, underscoring just how far the life sciences real estate market has fallen from its pandemic‑era peak.
The REIT swung to a $73.7M loss in the second quarter, saw net operating income drop 10%, and continued to face delays in selling property, all signs of a sector still struggling to find its footing amid a deep and persistent supply glut.
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And while the life sciences industry itself is seeing signs of improvement, landlords aren’t seeing those indicators translating to leasing activity.
The industry has “decoupled from demand on the ground,” Alexandria Chairman Joel Marcus said on the company’s earnings call Tuesday.
Since the stock market opened Tuesday, Alexandria stock has dropped roughly 4% to just under $49, which still places it above the $40 year-to-date low point this past April.
Alexandria and its competitors continue to struggle amid a life sciences real estate sector simply unable to regain momentum during a prolonged supply glut. Rent for labs was down 5.3% year-over-year to $64 per SF, and vacancy crept up to 24.3%, according to Cushman & Wakefield’s Q2 life sciences report.
While Alexandria’s Q2 leasing volume did just surpass 1M SF, beating the average of the last few quarters and jumping 60% from the sluggish leasing performance last quarter, the news was decidedly mixed.
Rental rates dropped 0.7%, a much more palatable drop than the 15% decline the company posted in the first quarter, but not a reversal back into growth territory. Occupancy slid to 86.9%, a noticeable decline from 91.7% in Q1 of 2025, and impacting NOI.
The tenant mix of this quarter’s leases demonstrates some of the shifts that life sciences landlords have had to make, bringing in tenants outside the traditionally defined world of biotech.
Just 6% of the tenants that signed leases this quarter were public biotech companies, a step up from last quarter, when none signed new deals with Alexandria, but still indicative of fundraising troubles. Public biotech right now is “slow and lagging,” Alexandria Executive Vice President Hallie Kuhn said.
Roughly 40% of leasing came from medical product and device firms, the “picks and shovels” of the biotech world, according to Alexandria Chief Financial Officer Marc Binda.
Another 30% came from advanced tech firms, with significant leases signed at Greater Boston properties including 3000 Minuteman Road and 311 Arsenal St. Tech tenants are expected to make up a significant part of leasing next quarter as well, Binda said.
There were some positive movements in concessions, which have steadily increased in recent years as owners try to maintain higher lead rental rates amid gluts of open lab space. The amount of free rent in Alexandria leases on average dropped from two months per year to 1.5 months.
Alexandria also faces more upcoming vacancies, with 451K SF of leases expiring in the second half of the year and 1.4M SF expiring next year, with between 12 and 24 months of expected downtime. The future performance of the company will hinge in part on its ability to quickly fill those gaps in a challenging market, Binda said.
“We are laser-focused on leasing up vacant space,” he said.
Alexandria has made disposition of its property and noncore assets a key part of its capital strategy in recent years, and sales this year through Aug. 3 have been muted, at $170M. Marcus downplayed “artificial timing” and expects the company to meet disposition targets again this year.
The company also took a $222M impairment charge on these sales, due to a weak market for properties and land previously highly valued as ground-up development or conversion opportunities, including a Toronto office building.
In one case, Alexandria took a $64.2M impairment related to a land parcel in San Diego’s Sorrento Mesa submarket, a reminder of the challenges noncore markets are having even in the big three life sciences markets. Binda predicted that there may be more impairments in upcoming quarters.
The firm still expects to do $2.9B in sales by the end of the year. That leaves a significant number of deals left to complete, but last year saw a similar rush of transactions in Q4, and Binda noted during the call that $1.2B in deals remain “in progress.”
Financing is taking longer for buyers to secure, pushing back the timeline for many potential sales, CEO Peter Moglia said.
In addition, Alexandria continues to evaluate 1.4M SF of projects in the construction pipeline, considering whether to pivot on these builds and further reduce construction funding requirements. The firm has shrunk its construction pipeline by one-fifth since the start of this year.
Marcus briefly noted challenges from federal agencies, suggesting that “truly knowledgeable and expert leadership” at the National Institutes of Health, Food and Drug Administration and Department of Health and Human Services would “certainly go a long way,” but devoted less time to regulatory issues than he has on past earnings calls.
Despite Alexandria’s challenges, Binda doesn’t expect a further occupancy drop. While it’ll take some work to get ahead of coming vacancies and backfill the space, he expects vacancies to stay around 87% at the end of the year. Alexandria has positioned itself to be flexible, looking to meet the market and both make concessions and welcome an atypical tenant mix, Moglia said.
The company’s projections indicate an estimated 950K SF of leasing in the third quarter, suggesting a steady rate of activity in the near future, contributing to stronger NOI performance in the second half of 2026. There’s also been a slight jump in leases in the 20K-to-100K-SF range, a welcome uptick for a lease category that has lagged in recent quarters.
