Alexandria Real Estate Equities posted a $11.6M net loss in the first quarter, demonstrating how the sluggish life sciences leasing market has impacted even the sector’s biggest property owners.

One year ago , the company posted net income of nearly $167M.

Chairman Joel Marcus put it succinctly during his company’s earnings call Tuesday: “These are perceived by many as the worst of times.”

Oversupply and demand dampened by a pullback in venture capital have plagued biotech landlords for more than a year, causing steep increases in vacancy in even the top life sciences markets. New federal cuts to institutions that provide crucial research and development funding have added another challenge.

Last year, life sciences companies gave back 2M SF in space, according to Colliers data , and nearly half the main life sciences markets nationwide had negative net absorption. Vacancy rates continued to rise in major markets in Q1, including 30% in San Francisco and 25% in greater Boston , according to CBRE data.

At ARE’s properties, occupancy sat at 91.7% as of March 31, nearly a 3% drop from the end of 2024. ARE changed its guidance for the rest of the year, noting in a recent financial statement that it experienced “slower than anticipated re-leasing of expiring spaces and lease-up of vacancy in our operating portfolio and our development and redevelopment pipeline.”

Alexandria's adjustments include a 70-basis point reduction in year-end 2025 occupancy and another 70-basis point reduction in expected same property net operating income performance. The firm’s stock price dropped nearly 8% over the last five days to $72.57.

Like many large real estate firms, ARE’s Q1 earnings reflect variables brought on by new federal policies.

Alexandria’s new earnings report notes that its guidance is “subject to a number of variables and uncertainties, including actions and changes in policy by the current U.S. administration related to the regulatory environment, life science funding, the U.S. Food and Drug Administration and National Institutes of Health, trade, and other areas.”

In an example of how Trump administration policies have collided with biotech real estate, Harvard University’s School of Public Health announced it would pull out of a lease at a Boston-area ARE building earlier this month as part of a downsizing effort brought on by its legal battle with the federal government.

Throughout 2025, ARE faces 3.7M SF of lease expirations, representing 10% of its occupied inventory. The company expects 461K SF of new space to reach stabilization in 2025 and has preleased or is in negotiations for 89% of that, according to ARE’s most recent 10-K . Roughly 4.3M SF of Class-A and A-plus property is being developed or redeveloped.

So far, the firm has leased 1M SF in Q1, with 38% of the space going to life sciences products, services and device firms and 27% to public biotech companies. ARE executives noted at different times throughout the call that Trump policies weren’t impacting the REIT’s performance.

“Activity for this leasing segment, typically driven by expansion requirements, remains muted for the moment, due to continued conservatism by life science companies and boards,” CEO Peter Moglia said on the call.

Those 2025 completions may become more costly due to tariffs, though Moglia said that tariffs “are not expected to have a material influence on our yield.”

ARE noted that of the $2.4B in remaining costs for this year’s expected projects, $1.3B wasn’t under contracts with guaranteed pricing as of March 31, with 30% to 40% of those costs covering materials that could become more costly due to tariffs, like steel and HVAC equipment.

The firm estimates that for every 10% increase in these tariff costs, incremental costs may go up as high as $50M and stabilized yields may decrease by up to 3.5 basis points. Delays aren’t factored into this estimate.

ARE has also continued to focus on its asset sales strategy. In Q4 2024, the firm sold $1.1B in assets as part of its long-term strategy to focus on megacampus properties. The new quarterly data shows ARE sold just $176M worth of property in Q1 and has $434M pending. Expected sales include a pair of roughly 70K SF properties in San Diego and Texas and an unidentified third property.

The company also has plans to sell an additional $1.3B by the end of the year to help handle capital expenses. Marcus noted that many of the sales have been from the REIT’s land bank, often selling assets that wouldn’t work for the megacampus strategy to residential developers.

One ARE sale in San Diego, a $124M deal for the Costa Verde Center, showcases the strategy in play. ARE had planned to turn the space into a megacampus, but instead sold for a $1M loss, with a new grant deed forbidding the new owner from using any part for life sciences, The San Diego Union-Tribune reported .

ARE’s megacampus revenue has slightly declined quarter-by-quarter: The overall goal, as stated during the Q2 2024 call, was to increase the percentage of revenue from these huge projects to 90%. The share has shifted from 76% in Q3 to 77% in Q4 to 75% in Q1 2025.