Investors have slowed putting capital into commercial real estate in the Denver-Boulder market during this fickle economic period, with the life sciences industry hit particularly hard, according to a new report by commercial real estate firm Cushman & Wakefield.

Inflation is one of the key economic factors that has limited venture capital funding in the area, which has seen an 8% year-over-year drop. In turn, leasing in the life sciences industry plummeted in the first half of 2023 compared to last year, with only 170,000 square feet of leasing activity.

For context, the area’s market consists of around 5.5 million square feet of life sciences inventory at an average rent of about $17 per square foot, Cushman & Wakefield’s report said.

During the first half of the year, the Denver area saw only one life sciences industry sale: 389 Disc Drive in Longmont, bought by Boulder real estate investment firm Conscience Bay Company from Seagate Technology in June. Now, Seagate is instead renting the 533,000-square-foot space from Conscience Bay.

Additionally, sustainable hydrogen company Utility Global is leasing 19,000 square feet at 373 Inverness Parkway in Englewood from Beta Investment Group, and an undisclosed company is renting almost 33,000 square feet at 7084-7088 Winchester Circle in Boulder from real estate developer Tebo Properties.

Companies that make up the life sciences sector include those involved in the research, development and manufacturing of pharmaceuticals, medical devices, biomedical technologies and food processing, according to life sciences platform Scilife.

Familiar names in the Denver area include medical device company Medtronic, biotechnology company Pfizer, pharmaceutical company Eli Lilly and Co. and laboratory technologies company Agilent Technologies.

As a silver lining, the sector’s current vacancy rate is about 8% – the lowest rate in eight years. During the COVID-19 pandemic, that rate reached a high of 20%.

Cushman & Wakefield still calls the sector “an area of growth within Denver-Boulder’s real estate market.”