UK Regional Offices MarketBeat

For the data behind the commentary, download the full Q3 2025 UK Offices Report.

Refurbishments Bridging the Gap as New Development Slowly Returns

After no new construction starts in Ql 2025, activity has begun to pick up over the past six months. Botanic Place in Cambridge commenced in Hl, promising 330,000 sq ft of new space for 2028 delivery. In Manchester, The Republic at the Mayfield scheme broke ground in Q3 - the first ground-up start in the 'Big Five' this year – while Birmingham saw refurbishment works begin at Colmore Gate. In Leeds, demolition has started at 31 Wellington Street, with speculative construction scheduled for early 2026.

At the close of Q3, 3.4 million sq ft remained under construction across the regional markets, with over 13% prelet or under offer, leaving 3.0 million sq ft of speculative space due for completion by 2028. Of this total, 1.9 million sq ft is in the 'Big Five' regional markets and 1.5 million sq ft in the South East. While still below historic norms, it marks the highest level of speculative development in over a year.

The post-pandemic regional landscape has been defined by a 'development drought', driven by high construction, financing and fit-out costs, and by occupier uncertainty around hybrid working and business planning. As a result, markets face a demand-supply imbalance, with limited Grade A availability and strong occupier preference for prime space pushing rents higher.

In Q3, headline rents rose in four of the Big Five cities, with only Manchester recording no growth. Bristol became the first to breach the £50 psf mark following the Birketts deal at EQ, while a similar milestone is expected in Birmingham once the final floors at Three Chamberlain Square are let. This rental growth has helped narrow viability gaps, but further rental uplift and yield compression are still required to make new-build schemes feasible, with developers estimating that rents must reach the mid-to-high £50s psf range to justify ground-up construction.

Until then, refurbishments are bridging the gap, servicing demand for high-quality space. So far this year, 66% of all space delivered has been through refurbishments - a post-pandemic high, compared with less than half in prior years. Repositioning existing assets is increasingly appealing to landlords, offering faster delivery, lower embodied carbon, and significant cost savings through structural retention and shorter programmes.

From an investment perspective, buyers remain highly selective, targeting assets with repositioning potential and returns commensurate with risk. This is evident in recent transactions such as 101 Embankment in Manchester (£75 million) and Baskerville House in Birmingham (£37.7 million), both offering scope for value enhancement through active management or refurbishment. However, the health of the investment market remains as critical as rental growth in supporting speculative development. Aside from the trading of vacant buildings at historically low values, there has been little evidence of renewed activity or the yield compression that many had anticipated in 2025 - suggesting that, for now, selectivity and value-add opportunities will continue to dominate investor
strategies. Within the last quarter, however, there are signs of a number of new investors starting to seek anything from core to value add offices in larger regional cities.