Refurbishment dominates UK cities office development pipeline

Refurbishment projects account for the largest share of the office development pipeline across the UK’s major regional cities, as new build activity remains subdued and occupiers continue to favour high quality, sustainable space. According to new figures from Avison Young, refurbishment schemes now represent the majority of space under construction in the Big Nine regional office markets. The volume of refurbishment space in the pipeline has risen by 12 percent year on year, reflecting a sustained shift towards upgrading existing stock rather than delivering entirely new buildings.

Overall development levels remain below long term averages. While office take up across the regional markets has stabilised, the number of speculative new build starts has fallen sharply compared with pre pandemic norms. Rising construction costs, viability pressures and tighter funding conditions have all constrained activity. In this context, landlords are focusing on repositioning existing assets to meet demand for Grade A accommodation.

The data indicates that occupiers continue to concentrate on well located city centre buildings with strong environmental credentials and high quality amenity provision. As a result, older offices that do not meet current performance standards are increasingly being refurbished to improve energy efficiency, internal environment and overall appeal. This approach also aligns with regulatory pressures and corporate commitments around carbon reduction.

Several regional markets are seeing particularly strong refurbishment pipelines, including Birmingham, Manchester and Leeds. In some cities, refurbished space accounts for more than half of all schemes due to complete over the next two years. By contrast, the volume of new build completions expected over the same period remains limited, contributing to a constrained supply of prime space.

Headline rents in a number of regional centres have continued to edge upwards where demand for best in class offices exceeds availability. However, secondary space without significant investment is facing weaker demand and higher vacancy rates.

The analysis suggests that the current development cycle will continue to be shaped by refurbishment led delivery in the near term, with total new supply across the Big Nine markets forecast to remain well below historic averages through to 2027.