Office construction output fell by 20% in 2025 and has fallen further in 2026, adding to already acute supply shortages, a report from Barbour ABI has revealed.

UK office construction output fell by 20% in 2025, and has fallen further so far in 2026

Construction output across London and the UK’s major regional cities fell to £10.2bn last year, and the data shows that just 152 office construction contracts, worth a combined £2.7bn, were awarded during the first five months of 2026, versus 185 contracts worth £3.9bn over the same period in 2025.

In 2026, only 694,000 sq ft of office space is expected to be completed across the big nine regional cities, significantly below the average of 2.2m sq ft per year from 2020 to 2024, in the latest sign of growing office supply shortages.

Savills data cited in the report puts City-core grade-A vacancy at just 2.2%, while other sources put grade-A availability in the City and West End as falling below 0.5% in the fourth quarter of 2025. It fell to 3.6% across the other regional city markets, or just 1.1% for new builds, as a result of the reduced supply.

This has pushed rents upwards, with average prime rents exceeding £100/sq ft for the first time in 2025 and reaching £105.26/sq ft by the year-end, up 6.8% year on year. This was led by £145/sq ft at 8 Bishopsgate.

In the West End, average prime rents reached £166.61, which was up 6.1% on 2024.

Across the big six markets of Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester, cumulative prime rental growth has averaged 37% since 2019.

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.

“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. Starts are expected to remain below trend levels through 2026 due to ongoing issues, including planning constraints and high build and financing costs.

“Thus, the grade-A supply gap is unlikely to close any time soon. This dynamic is most acute in London but is also increasingly apparent across major regional cities.”

According to the report, office construction output in Great Britain is expected to remain subdued in the near term. New work output is forecast to fall by 5% in 2026 before increasing by 1% in 2027. Stronger growth is expected from 2028 as pressure to address shortages of grade-A space increases.

The total potential pipeline from 2026 onwards sits at almost £38.6bn across 2,255 projects, and of this 56% of value (£21.6bn) is currently at contract or tender phase.