UK Regional Offices MarketBeat

For the data behind the commentary, download the full Q2 2025 UK Offices Report.

Are Regional Office Capital Markets Poised for Recovery?

Despite a slow start to 2025, regional office investment volumes are showing early signs of recovery. While Q1 marked the weakest opening quarter since 2012, Q2 brought an uptick in activity. The £426.3 million transacted across the Big Five and South East represented a 43.4% increase on Q1 volumes, though still remaining 55.7% below the five-year quarterly average. Nonetheless, several green shoots signal a potential rebound in the regional office market.

Notable transactions, including the £75 million acquisition of Capital Square and the £50 million Quartermile 1 deal in Edinburgh, are under offer and expected to complete in H2 2025, signalling renewed investor interest. In spite of these examples, smaller lot sizes (under £50 million) continue to dominate, reflecting a post-COVID trend toward more manageable, mid-market assets where liquidity is returning first. Appetite for value-add opportunities, where Central London markets are buoyant, is now emerging to address the low pipeline of Grade A stock across regional markets. Forma is due to complete shortly on its £83 million acquisition of 2 Snow Hill in Birmingham.

An uptick in investor sentiment supports an improvement in the market. In March 2025, all tracked markets across the Big Five and South East recorded positive total returns for the first time since mid-2022. C&W’s proprietary TIME Score—a forward-looking index tracking cyclical trends, momentum, and economic indicators—has been rising steadily since 2023 (despite a brief Q4 2024 dip), signalling a potential turning point in the investment cycle. As conditions improve and returns strengthen, it indicates that now may be an opportune time to re-enter the office market.

Changes in occupier behaviour offer further encouragement, with the BCO recently reporting an uptick in office occupancy across regional markets. More pertinently, our National Office Moves 2025 analysis found that contrary to expectations of widespread downsizing, most firms relocating across the Big Five in 2024 expanded their office footprints. This supports a more optimistic demand outlook, particularly as speculative development remains constrained, with just 2.5 million sq ft is currently under construction speculatively across the Big Five and South East. This limited pipeline is expected to place upward pressure on rents, enhancing returns and unlocking further investment activity.

While some headwinds persist, the convergence of improving returns, changing occupier behaviour, and restricted supply suggests that regional office investment volumes could increase over the coming quarters as confidence gradually returns.