Supply and demand to dominate trends for workspaces in 2025
As leaders in their respective fields, Place Yorkshire spoke to MEPC and York Biotech Campus to gather their predictions for office and lab spaces in 2025, and it appears that sustainability, refurbishing, and repurposing hold the key to the future.
Paul Pavia, head of development at MEPC, the developer and asset manager behind grade A office scheme Wellington Place in Leeds, noted that demand for premium office space in the city was strong in 2024, with sustainability playing a key part in attracting prominent companies with ESG targets – a trend he believes will continue going forwards.
This, he says, was demonstrated by, “The swift uptake of the newest buildings 11 & 12 Wellington Place, some of the most sustainable office buildings in the UK, by businesses such as Hill Dickinson, JLL, GHD, Lloyds Banking Group, and Arup.”
Liz Cashon, Estates Manager at York Biotech Campus, also put sustainability at the top of her trends list: “Sustainability will continue to dominate conversations in 2025, with more organisations prioritising alignment between their ESG strategies and the buildings they occupy.
“Collaboration between landlords and occupiers will be essential and understanding energy consumption, setting realistic
targets, and working together to achieve them will be key to success.”
Aside from sustainability, supply and demand was also at the forefront of both Pavia and Cashon’s minds in terms of what will influence the workspace market this year, with roots stretching all the way back to the Covid pandemic.
Pavia noted, “After a period of uncertainty around space requirements following the shift to hybrid working, businesses are now generally settled on their working space requirements.
“In fact, some businesses who made an early call to downsize are now re-visiting those decisions and it feels like generally, demand for high quality office space has never been stronger in Leeds.
“However, there is now a challenge to meet this demand, as older obsolete office stock is repurposed and removed permanently from the market and constrained investment means that very little new stock will be added to the supply over the next few years.
“This is a potential concern for the growth of regional cities and the economy in general as the service sector, which is reliant on office space, is the UK’s largest industry and a key driver of economic performance.
“This supply demand imbalance has led to unprecedented rental growth, which shows no signs of abating and rents for the best quality, best located, refurbished space now exceed the rents achieved from the last phase of new build development, which is quite remarkable.”
Cashon also highlighted the need for grade A offerings coupled with the pressure of limited supply: “Overall, the demand for lab space in the region remains significant and shows no signs of slowing down.
“As a result, we are actively exploring how to adapt our onsite space to meet this demand. This includes conducting feasibility studies to transform existing office spaces into state-of-the-art laboratories.
“We anticipate sustained demand for lab space, but meeting this demand will remain a challenge due to limited availability. This also poses a challenge in retaining existing businesses in the region as they expand and require additional space.
“Given the high cost of new construction, we expect retrofitting and the conversion of unused or underutilised spaces into laboratories to become increasingly common in 2025. This approach offers a cost-effective and sustainable solution to address the growing demand for lab facilities.”
Clearly, then, top trends for 2025 are the effective use of space and the need to refurbish underutilised working areas. Does MEPC or York Biotech Campus have any specific plans for the year?
Cashon said, ““Sustainability will remain a key priority for us in 2025. In 2024, we welcomed our new Head of Campus, Victoria de Kock, who has been instrumental in developing our new sustainability strategy. The coming year will see the launch of several critical projects as part of our commitment to achieving Net Zero.
“Additionally, we’ll continue to focus on enhancing facilities for our occupiers, with plans to upgrade our fitness centre and restaurant, ensuring we provide an exceptional experience for everyone on campus.”
Pavia said, “Good quality refurbishments will need to fill the supply gap in 2025 while we wait for a return to new build development. At Wellington Place we will be carrying out a significant refurbishment of 2 Wellington Place. It’s already generating strong interest.
“There will also be more obsolete offices sold at low prices and repurposed for other uses, including hotel and residential. We expect by the end of 2025 and maybe before, a new build or two will be coming out of the ground. This includes 9 Wellington Place, which has already received planning approval.
“History tells us that first mover advantage in a recovering market is key to maximising returns for investors, and this time the strong occupier story makes the rationale for being the first even more compelling.”
