Boston has 4.7 million square feet of lab construction under way, including the King Street Properties' $915 million Allston Labworks project. Image courtesy of King Street Properties and DiMella Shaffer

Greater Boston’s once-burgeoning lab market took a step back in the fourth quarter, as sublease space hit 1.5 million square feet.

The inventory of sublease space is nearly triple the total at the end of 2021, CBRE reported.

Local companies added 430,000 square feet of sublease listings during the fourth quarter, two-thirds by companies that are downsizing or distressed. Approximately 330,000 sublease space was committed or taken off the market during the fourth quarter.

“Market volatility is likely to continue through the first half of 2023, with sublease space continuing to be added to the market, and new supply coming online,” CBRE reported.

The downturn sets the stage for a supply glut, as developers move ahead with 15.3 million square feet of lab projects under construction. Boston and Cambridge account for 4.7 million square feet and 4.1 million square feet of the construction activity, respectively.

The availability rate in the 16.4 million-square-foot Kendall Square submarket hit 11.1 percent, while Boston’s 14.2-million-square-foot lab market now has a 24.6-percent availability rate.

Venture capital funding – a key source of growth for early- and mid-stage biotechs – has declined sharply in the past year.

U.S. venture capital funding dropped 37 percent in 2022, according to a report released today by CB Insights. Funding remained 31 percent above 2020 levels.