Why Are Rental Labs Gaining Attention? An Explanation of Market Growth and of key points

The business environment changes significantly every day, and company research and development are undergoing similar large transformations.

In this context, rental labs are gaining attention. The supply of rental properties for companies seeking to establish their labs and R&D bases has been increasing in recent years. Previously, small rental labs were developed for startups and small businesses by public sectors such as universities and local governments. However, in recent years, large rental properties dedicated to research have been increasingly developed by the private sector. Furthermore, offices that have been converted for R&D use have entered the market, accelerating growth in market size.

Source: JLL, based on data as of June 5, 2025. The data collection and estimation focused on the area of “rental spaces for companies that mainly conduct scientific experiments and R&D activities within their exclusive areas, and properties that mention R&D as a potential purpose. Conversion properties were defined as "properties whose main purpose does not include lab/R&D, but which explicitly state in leasing brochures that the space can accommodate laboratory use.

*Notes: 

• Properties with unclear leasing start dates are assumed to have supplied R&D rental space in the year of their construction completion.
• In this figure, the Kanto region refer to the Tokyo and four surrounding prefectures (Kanagawa, Chiba, Saitama, and Ibaraki).

According to JLL Japan Research, the stock area of rental R&D properties in the Kanto region reached approximately 400,000 sqm by the end of 2024. In the 2010s, the stock increase was 110,000 sqm, and in the 2020s, it is expected to be 480,000 sqm (including estimates). The rental lab property market is expected to expand more than four times faster in the 2020s than it did in the 2010s. It can be said that 2025 is a mid-point in a significant expansion of the rental lab market.

Yuki Matsumoto, Senior Manager of JLL Japan Research, and author of the JLL report "Location Strategies for Research and Development Facilities in Japan: The Potential of R&D Property Lease," explains the increase in stock as follows:

“In addition to the increasing number of properties being supplied, there is a supply trend toward larger properties. We anticipate the 2020s to have 26 new dedicated rental lab buildings, nearly double the 14 buildings supplied in the 2010s. Additionally, the rental area per building was approximately 7,600 sqm in the 2010s, but is expected to nearly double to approximately 13,000 sqm in the 2020s. Due to changes in supply trends, diversification in potential rental areas for tenants is also developing, from small-sized to large-scale areas. Furthermore, as exemplified by the Mitsui Link-Lab Series expansion to areas such as Kashiwanoha (Kashiwa City, Chiba) within the Greater Tokyo Metropolitan Area, Shin-Kiba (Koto City, Tokyo) within Tokyo's 23 wards, and Nihonbashi (Chuo City, Tokyo) in the city centre of Tokyo, supply increases have brought about diversification in location sites. Through these changes, rental labs are becoming a popular option for accommodating the R&D activities of a wide range of companies.”

So, what is the reason for the rise in rental labs? Matsumoto points out two changes related to "workers" and "research and development."

1. Worker Changes: Work Style and Labour Force

With Japan's declining population, labour shortages have become an increasingly pressing issue for companies. Such factors have led companies to transform offices into "worker-standard spaces” for the sake of securing skilled workers. By creating workplaces that prioritise worker comfort and convenience, companies intend to not only improve productivity but also recruit and retain talent in the long term.

Regarding the " The Future of Work Survey 2024 (hereinafter, FoW Report), conducted by JLL, covering over 2,300 executives from global companies (including Japanese companies), respondents were asked about management goals they hope to realise (or management issues they want to solve) through their corporate real estate (CRE) in the next five years. Notably, Japanese companies prioritised "supporting talent attraction and retention" as most important (45%), a significant difference compared to the global average (28%).

Such company awareness is already apparent in the office sector. Demand for high-grade office buildings in urban centres is very strong, and there are currently very few vacancies. To improve worker satisfaction and retention, efforts are spreading to set up offices in cutting-edge buildings with comprehensive amenities like lounges and fitness centres.

In addition to the physical workplace, many companies are also focusing on transforming the way they function. According to the FoW report, 61% of Japanese companies have adopted a policy of “remote work at least once a week”, exceeding both the global average of 56% and countries in the Asia-Pacific region (including China and India). It can therefore be said that Japanese companies are implementing employee benefit systems even on a global scale, with hybrid work systems at the forefront.

In response to these trends, Matsumoto anticipates them to “expand to any place where people work. Especially in R&D facilities where exceptional talents (researchers) are needed, this trend will continue to spread”.

As for why he expects workplace reform to advance in R&D facilities, he points to the fact that many companies have not yet started. In the FoW survey, “facility utilisation rates” are used to measure the spread of efficiency initiatives; however, when it comes to the life sciences field, only 18% of companies measure utilisation rates. Essentially, R&D facilities have much room for efficiency improvements, and according to Matsumoto, they represent a "frontier where work-style reforms are about to occur."

2. R&D Changes: The Increasing Importance of Knowledge Exchange

With the shortage of skilled workers, increasing productivity is becoming a major goal for companies. To increase the productivity of R&D facilities and to accelerate innovation that breaks down complexity, there is a growing demand for new types of R&D facilities that encourage communication among workers. To prevent information leaks, facilities have been typically placed in highly confidential locations and limited to in-house use. However, an increasing number of companies are attempting interdisciplinary R&D to promote innovation through interaction with a diverse range of people (both inside and outside of the company). The demand for new hardware (R&D centres) in response to such trends is also rising.

JLL compiled news reports and press releases regarding the establishment and relocation of research and development centres (from 2020 to about three and a half years later) and analysed the reasons in more than 200 cases. The results showed that "knowledge exchange" was the most common reason, with over half (54%) of cases citing goals of increasing interaction between people, both within and outside the company. Furthermore, when comparing and analysing this data between owned properties and leased properties, leased properties (approximately 50 cases) emphasised knowledge exchange, with 20% mentioning talent recruitment, a significantly higher percentage compared to owned properties (approximately 150 cases), in which only 5% mentioned recruitment.

In the case of company-owned properties, there was a trend to develop large-scale facilities to unify or expand bases, and to strengthen in-house cooperation across different departments. In the case of leased properties, establishing facilities in well-located areas has emerged as a strategy to facilitate external collaboration and attract skilled human resources. However, the recent increase trend in the larger rental R&D facilities is expected to promote that the rental labs market absorbs more demand for expansion and integration of corporate R&D sites as well.

JLL, using the national census, compared researcher and labourer day-night population ratios in the Kanto region. They found the labourer daytime population (working area) to be concentrated in the inner-city, whereas the working area of researchers was more dispersed, suggesting that researcher workplaces are often outside the city. Because researchers prefer to live in the inner-city, enhancing workplace convenience, just as with offices, is essential for talent recruitment and retention.

From this analysis, Matsumoto believes that the " R&D sites set the utmost priority on inventing new knowledge and technology. By interacting with diverse, talented people, and combining each other's ‘know-how’, we can anticipate increased productivity and innovation."

Previously, research and development centres were mainly company-owned, independent facilities located near factories for product development. However, as gathering and exchanging talent have become priorities, R&D centres are expected to become more like office buildings. Due to their urban locations and access to convenient transportation, the costs of in-house development are likely to become burdensome, making rental labs a more viable solution to meet this demand.

The supply of rental labs is also likely to increase because they represent socially significant initiatives. Many rental lab faclities have been developed with the aim of fostering innovation, and in the United States, innovations have been seen to emerge from concentrated "clusters" of R&D centres. In Japan, rental labs are expected to serve as infrastructure for the formation and expansion of innovation clusters.

Source: JLL Note: The data collection area for offices in the US is nationwide, while lab spaces only cover "life sciences field" properties in the following areas: Bay Area, Boston, Washington D.C.-Baltimore, New Jersey, Philadelphia, Raleigh-Durham, San Diego, and Seattle.

JLL's investigation of trends in occupied floor space for offices and rental labs (covering only the life sciences field) in the United States showed that, with 100 at the end of 2014, office operating floor spaces at the end of 2024 remained almost the same at 97 (minus 3). Meanwhile, the number for rental labs at the end of 2024 was 158 (plus 58), approximately 1.6 times greater. This implies that new rental property supply has propelled floor space demand.

"The fixed notion that 'research and development centres should be self-owned' may be overturned going forward. As successful examples accumulate—both in new rental lab real estate development itself and in innovations achieved by tenant companies—we can expect the rental lab market in Japan to become more active, similar to the United States. The frontier of CRE (corporate real estate) in the 2020s is industrial real estate, and companies that build cutting-edge workplaces in this area, improve productivity, and generate innovation may be able to develop the resilience to withstand the constant turbulent changes in the business environment," says Matsumoto.

Download JLL reports on rental R&D real estate here

Source: Mitsui Fudosan

Considering changes in the social environment, rental laboratories have become a long-awaited asset class for companies, with an increasing new supply. The merits of using a rental laboratory are enormous, but what should you look for when choosing one of the many facilities? Shunji Yamazaki, of Mitsui Fudosan, oversees the operation of Mitsui Link-Lab, a leader in the domestic rental laboratory market. Yamazaki points out that the standards for selecting a rental laboratory are "that operational rules are in place, and that support from scientists can be received for specialised experiments."

Point 1: Maintenance of Operation Rules

When it comes to business operations, an essential point is to comply with the relevant legislation/guidelines, and this is also applicable in the situation of lab openings, in particular, legislation/guidelines related to experiments are established by each industry, and their content covers a wide range of topics.

According to Yamazaki, departments specialising in regulatory compliance exist in large corporations, providing substantial support for researchers to concentrate on their research fully.

For example, when experiments related to drug development often involve handling chemical substances and biological specimens, and the relevant laws and guidelines are wide-ranging. These laws and guidelines range from those well known to researchers, like the Infectious Disease Act, the Poisonous and Deleterious Substances Control Act, and the Narcotics and Psychotropics Control Act, to regulations not directly related to experiments but mainly to buildings, such as the High Pressure Gas Safety Act and the Building Standards Act. It is necessary to carefully avoid infringements of guidelines and laws, which are severely punished, but taking countermeasures for proper observance with thorough comprehension of a wide range of related laws and regulations is quite difficult. Therefore, making use of facilities with robust support systems—such as well-established operational rules—can make it much easier to mitigate risks.

According to Yamazaki, Mitsui Link-Lab provides support to tenant companies with examples of laws and regulations in its terms of service, as well as with facilities that satisfy legal standards. For example, the Fire Service Act and Building Standards Act limit the number of hazardous materials that can be stored and handled, and both laws must be adhered to. Mitsui Link-Lab assigns appropriate limits to each unit and manages them accordingly. At some facilities, fire-resistant compartments are constructed and storage rooms for small-quantities of hazardous materials are installed as measures to ease the restrictions on designated quantities.

Point 2: Scientist Support

Yamazaki says that once operations begin in rental labs, situations where planned experiments cannot be conducted due to equipment deficiencies must be avoided.

Mitsui Link-Lab has established a system that allows the installation of equipment to be reviewed from the researchers’ perspective before operations begin. Prior to signing a lease, planned experiments are reviewed and support is provided to identify and catalog the chemicals to be used. This ensures that tenants can start their research and business activities in full compliance with regulations, supported by experienced scientists who are actively involved in facility management. "Proper facility management after operations begin is essential,” Yamazaki points out. To that end, Mitsui Link-Lab requires tenants to submit monthly reports, enabling the facility to monitor the handling of hazardous materials and ensure safe and reliable operation.

With the changes in the social environment, rental lab demand is expected to expand. Apart from Mitsui Fudosan with Mitsui Link-Lab, major developers and foreign investors have also begun to participate in the rental lab business, contributing to the increasing trend in the number of facilities.

At the same time, companies exploring rental lab spaces often face challenges in evaluating which lab is suitable for them. For companies considering using a rental lab, we would be happy if they consulted the selection points explained in this article.

JLL has supported the development of R&D facilities as a project manager, in addition to assisting clients with site selection and lease negotiations. When considering the use of rental of rental laboratories, it may be worthwhile to consult experts like JLL for professional guidance.

Consult JLL Experts

This article is based on presentations given at the Mitsui Fudosan & JLL's Joint Seminar, held on June 18, 2025.

*Note: This article is an English translation of the “賃貸ラボが注目される理由とは？施設増加の背景、選定ポイントについて解説する” released on 31 July 2025. In the event of any discrepancies between this translation and the original text, the original text shall take precedence.

Translated by Yuki Matsumoto and Hibah Ahmed, JLL Japan Research and Riyo Nagaoka, Mitsui Fudosan.