Prime office rents in the UK’s regional office markets rose at a record pace in 2025, driven by focused occupier demand for a limited supply of best-in-class space, according to the Lambert Smith Hampton (LSH) latest Regional Office Market Report.

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Prime time

Prime rents in the 15 key regional office markets are on course to rise by an average of 8.2% in 2025, while growth across the ‘Big Six’ markets (Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester) is expected to be even stronger at 10.2%. These growth rates are the highest ever recorded by LSH, and have taken headline rents in many city centres to levels that would have been almost unthinkable a few years ago.

The strongest prime rental growth over the year to Q3 2025 was in Leeds, which recorded an exceptional 18% increase; while Birmingham will achieve annual growth of 20% in 2025, with its prime rent hitting £52 per sq ft during Q4. The £50 per sq ft mark was also reached in Bristol this year, while Manchester is expected to hit this benchmark in 2026.

Record prime rental growth rates reflect a continued occupier focus on best-in-class city centre buildings with high quality amenities and strong ESG credentials. Given their relative scarcity, prime buildings have typically witnessed aggressive lease up rates, with strong rents being required to secure viable development.

Prime take-up was boosted by a string of large-scale transactions, including deals to Hargreaves Lansdown at the Welcome Building, Bristol (90,000 sq ft); EY at Three Chamberlain Square, Birmingham (94,000 sq ft); and Trader Media at 3 Circle Square, Manchester (130,000 sq ft).

Dwindling prime supply

Total office availability remains high in an historical context, but it has edged down by 1% from the 10-year high seen at the end of 2024, primarily driven by a 3% fall in grade A supply. However, these figures mask a sharper decline in prime supply, which now represents just 5% of total availability across the regional markets, down from 9% two years ago.

Despite an emerging prime supply shortage, developer appetite remains muted by a cocktail of high build costs, elevated costs of finance, fears over voids and ongoing investor uncertainty over exit yields. At the end of Q3, total speculative development under construction (net of pre-lets) across the 15 markets stood at 2.3m sq ft, up 27% on the 12-year low seen at the start of 2025. However, anticipated speculative development starts for 2026 amount to a meagre 589,000 sq ft.

Investment remains subdued

While 2025 has been a challenging year for the investment market, due largely to an uncertain economic backdrop and elevated gilt yields, sentiment towards the office sector has undoubtedly improved amid rising occupancy levels and sustained prime rental growth. However, this is yet to translate into increased transaction volumes, with investment in the regional markets over 2025 to Q3 totalling £938m, almost identical to the same period of 2024 and substantially below long-term trends. 2025 likely to be the first year since 2008 to see no £100m-plus deals in the regional markets.

A more robust increase in volume is expected in 2026, underpinned by increased investor competition and the arrival of several high-quality regional assets to the market, including Paradise, Birmingham; Wellington Place, Leeds; and 4 Angel Square, Manchester. These assets should drive the return of larger-scale deals, and they are likely to be an important bellwether for pricing, potentially influencing decisions on further similar disposals in 2026.

While there is limited transactional evidence, the severe pricing correction that began in late 2022 appears to have run its course. Prime regional office yields were stable in 2025, standing at an average of 6.71% across the Big Six cities. Secondary pricing also appeared to bottom out in 2025; albeit with Big Six secondary yields at 12.50%, there is a record wide discount to prime.

Peter Musgrove, Senior Director and Head of Regional Offices, said: “The regional office markets have shown resilience throughout 2025, despite uncertain economic conditions and fragile business confidence. While the backdrop may remain challenging into 2026, positive market fundamentals point to significant opportunities to capture growth and restore value.

“While prime space isn’t for every occupier, its relative scarcity has been a key driver of market change. Prime rental growth over the past year has been nothing short of spectacular in the core regional markets. Given subdued developer appetite and dwindling best-in-class availability, prime rents are set to remain subject to upward pressure in 2026.”

Charlie Lake, Director, Senior Director – Office Advisory and Capital Markets at LSH, said: “The recent Autumn Budget passed without an adverse market reaction and, with interest rates set to remain on a downward trajectory and lender appetite improving, the path is clearing for a stronger recovery in investment activity in 2026.    

“The refurbishment space is a particular area of opportunity for investors and developers. While this includes back to frame refurbishments, the most compelling opportunity arguably lies with the refurbishment of already-modern assets requiring lower levels of cap ex to elevate them to prime standards.”

Download the Regional Office Market Report 2025 here →