UK office construction output fell to £10.2bn in 2025. New contracts worth £2.7bn in 2026's first five months, down from £3.9bn. Prime rents passed £100/sq ft in the City, Grade A vacancy at 2.2%. Supply squeeze persists, Barbour ABI says.
Alpha Score of 48 reflects weak overall profile with moderate momentum, weak value, moderate quality, moderate sentiment.
New office construction in the UK slumped to £10.2bn in 2025, and the pipeline looks even thinner for 2026. Just 152 new contracts worth £2.7bn were awarded in the first five months of this year, down from 185 contracts worth £3.9bn at the same point last year, according to data from Barbour ABI.
The completion outlook for 2026 across the nine largest regional cities is just 694,000 square feet – far below the average of 2.2 million sq ft per year from 2020 to 2024. That tight supply has pushed rents higher. In the City of London, average prime rents crossed £100 per square foot for the first time in 2025, rising 6.8% from the prior year. West End rents climbed 6.1%. Across six major regional cities – Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester – cumulative prime rental growth has averaged 37% since 2019.
Grade A vacancy is the tightest it has been. Savills data cited in the report puts City core Grade A vacancy at just 2.2%. Other sources cited by Barbour ABI reported Grade A availability in the City of London and West End falling below 0.5% in the fourth quarter of 2025. Across the Big Six regional cities, Grade A availability is only 3.6%, with new-build vacancy at a mere 1.1%.
Ed Griffiths, head of client and business analytics at Barbour ABI, said the imbalance between strong demand and constrained Grade A supply is pushing prime rents upward across London and key regional markets. He noted that Grade A, well-located, ESG-compliant space is in high demand and short supply. According to CBRE, there is only 1.3 years of supply currently under construction across the whole of the UK. CBRE, which tracks the market closely, carries an Alpha Score of 52 out of 100 on AlphaScala, a Mixed rating in the Real Estate sector reflecting the constrained supply and rising demand dynamic. Starts are expected to remain below trend levels through 2026 due to planning constraints and elevated build and financing costs, Griffiths added.
“Thus, the Grade A supply gap is unlikely to close any time soon,” Griffiths said. “This dynamic is most acute in London but is also increasingly apparent across major regional cities.”
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