Rising rents highlight of another tough year for ‘resilient’ regional offices
A lack of supply and an increasing number of occupiers seeking the very best space will continue to drive rental growth in Manchester, Birmingham, Leeds, Newcastle, and Sheffield in 2026, according to a report on the regional workspace landscape by Lambert Smith Hampton.
LSH’s annual report reflects on another challenging year for the offices sector across regional cities in 2025.
The volatility wrought by Donald Trump’s tariffs, the uncertainty leading up to the recent Budget in the UK, and the ongoing war in Ukraine all contributed to market unease but overall, regional cities showed “resilience”, according to LSH.
The biggest success story of the last couple of years has been around rental tone. A lack of supply across many regional cities coupled with high demand for prime space has prompted “spectacular” rental growth, which is expected to endure, according to LSH.
Rental tone
Manchester’s £45/sq ft headline rent is expected to be broken in 2026 when the next phase of St Michael’s starts to let.
By the end of 2026, LSH is predicting that headline rents in Manchester will reach £60/sq ft.
The rental story is similar in Leeds, where the top rent is currently £46/sq ft – an 18% increase year-on-year. Rents are expected to exceed £50/sq ft over the next couple of years.
Newcastle’s predicted growth curve is flatter. A lack of opportunities for increases due to a limited forward pipeline means the city may not nudge far beyond its £32/sq ft headline before 2027, LSH has said.
Turner & Townsend’s deal at Elshaw House set a new record rent in Sheffield of £31/sq ft this year with further growth expected in 2026 at West Bar and 190 Norfolk Street.
In Birmingham, whose record rent stands at £46/ sq ft, LSH expects the £50/sq ft barrier to be broken in 2026. This year alone, prime rents have risen 20%, according to LSH.
“Eversheds is rumoured to be under offer at Three Chamberlain Square at £51.50/ sq ft, while other schemes capable of achieving over £50/ sq ft include the last remaining floor at 103 Colmore, 90 Colmore Row, and Colmore Gate”, the report states.
Take-up
In terms of overall take-up across the regional cities, Manchester is on course to record 1.2m sq ft of deals in 2025, in line with the five-year average.
Newcastle’s 440,000 sq ft will come in 80% above the 10-year average thanks to a 173,000 sq ft letting to DWP in Q1.
Leeds will land just above the 10-year average for take-up with around 620,000 sq ft transacted, while Sheffield will once again fall below the heady heights of pre-pandemic take-up which averaged just shy of 400,000 sq ft; in 2025, around 230,000 sq ft of deals will be signed by year end.
Birmingham will also fall below its 10-year take-up average, notching up just over 600,000 sq ft of deals for the year, the second lowest in the last nine years above only the pandemic-impacted 2020.
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.”
Hang on, so this is telling me Manchester will have as much office space delivered as Leeds and Birmingham combined? I know the place has been on a tear but hard to believe .
By Bjorn nbred