Refurbishment dominates regional office starts as new build stalls, Cushman & Wakefield says

Every office scheme that started construction across the Big Five and South East markets in the third quarter of 2026 was a comprehensive refurbishment, according to Cushman & Wakefield's latest UK Regional Offices MarketBeat.

The four starts totalled 441,600 sq ft, the property adviser said. Across its wider national development pipeline, seven of the eight schemes recorded as starting on site were refurbishments.

The one exception was 31 Wellington Street in Leeds, a ground-up scheme being developed speculatively by Prescient Capital. Cushman & Wakefield said the project was supported by a £27m development loan from BGO.

Doug Friend, chief executive of Prescient Capital, said in Clegg Construction's announcement of its appointment to the scheme: "Leeds currently has a significant shortfall of prime workspace".

The pipeline

At the end of the quarter, 2.8 million sq ft of speculative office space remained under construction across the regional markets, with completion expected by 2028. Cushman & Wakefield said about 60% of that pipeline comprised comprehensive refurbishments.

The adviser attributed what it called a post-pandemic "development drought" to elevated construction, financing and fit-out costs, together with occupier uncertainty over hybrid working, the effect of artificial intelligence on future space needs and wider business planning.

Repositioning existing buildings appealed to landlords, it said, because it offered faster delivery, lower embodied carbon and cost savings from structural retention and shorter programmes. Developers estimated that rents must approach £60 per sq ft to justify ground-up construction, according to the report, and until then refurbishments would continue to serve occupier demand for high-quality space.

Rents and take-up

Prime rents rose in several regional markets during the quarter. Bristol led the Big Five at £55 per sq ft, Leeds became the latest market to pass £50 per sq ft at £52.50, and Oxford set a new South East benchmark at £70 per sq ft.

Market	Prime rent (£ per sq ft)
Oxford	70
Bristol	55
Leeds	52.50

Take-up reached 1.4 million sq ft, 16% up on the previous quarter but 14% below the five-year quarterly average. Availability rose 2%, taking the vacancy rate to 10.7%.

Cushman & Wakefield said vacancy had fallen for five consecutive quarters before that because of limited new speculative supply, high pre-letting ahead of completion and constrained Grade A pipelines across most markets.

Investment

Regional office investment volumes reached £514.2m, 45% higher than the previous quarter but 38% below the five-year quarterly average. Prime yields in the South East and Big Five were unchanged.

The adviser said buyers remained selective and were targeting assets with repositioning potential, citing the acquisitions of One Tony Wilson Place in Manchester for £20m and 42 The Headrow in Leeds for £7.25m.

MCR Property Group announced on 23 July 2026 that it had bought 42 The Headrow, the former Direct Line headquarters in central Leeds, and put its gross development value at £37.6m. The building provides 106,461 sq ft of offices above ground-floor retail, with 54 basement parking spaces, and was comprehensively redeveloped in the 1990s for Direct Line Group, which occupied the upper floors until 2021.

MCR said it planned a comprehensive refurbishment to bring the vacant upper floors back into occupation and did not intend to implement the building's existing residential consent.

Martin Brown, director of commercial property at MCR Property Group, said: "We are investing more than ever across our commercial portfolio."

Cushman & Wakefield said Big Five office values had fallen 34% since 2019, with a steeper correction in the South East. It expects deferred launches and continued demand for best-in-class assets to support a recovery in investment volumes towards the end of 2026, with further momentum into early 2027.

31 Wellington Street

Clegg Construction said it had been appointed to build the 31 Wellington Street scheme, replacing the Wellington Plaza building. It will provide almost 80,000 sq ft of office space and is targeting BREEAM Outstanding and an EPC A rating.

Joint venture developers Prescient Capital and Asset Capital secured planning consent for the redevelopment, with Prescient Capital subsequently taking the project forward, the contractor said. Completion is due in summer 2027.

The Bank of England held Bank Rate at 3.75% at its 17 September 2026 decision. Its next decision is due on 5 November 2026.