Avison Young Reports Regional Office Shortages ‘Intensifying’ as Completions Fall

Why It Matters

The pronounced shortfall in new office space tightens inventory, likely driving up rents, lease incentives and prompting asset‑repositioning strategies across the UK’s secondary cities. Stakeholders must adapt to a market where scarcity reshapes valuation and investment priorities.

Key Takeaways

• Office completions to 2028 projected 48% below ten‑year average
• Shortage spans eight UK cities including Liverpool and Manchester
• Demand pressure may boost leasing rates and tenant incentives
• Developers may delay projects, extending vacancy cycles
• Investors eye repurposing office space into mixed‑use assets

Pulse Analysis

The latest Avison Young outlook signals a deepening gap between office supply and demand across the United Kingdom’s secondary cities. By 2028, the firm projects that new office completions will be 48 percent below the ten‑year average in eight key markets—Liverpool, Manchester, Birmingham, Bristol, Newcastle, Leeds, Edinburgh, Cardiff and Glasgow. The slowdown reflects lingering uncertainty from post‑pandemic work‑from‑home trends, tighter financing conditions, and a cautious developer sentiment that together are throttling project pipelines. The forecast also underscores regional disparities, as London remains insulated by its larger pipeline.

For landlords, the tightening inventory translates into a seller’s market that can support higher rents and more generous tenant‑improvement packages. Companies still seeking premium space are forced to compete for a shrinking pool, prompting lease negotiations that embed flexible terms, shorter commitments, and performance‑linked rent escalations. At the same time, the scarcity of new builds intensifies pressure on existing vacancy rates, encouraging owners to accelerate refurbishments or convert underused floors to meet evolving workplace expectations. Such dynamics are already reflected in recent transaction data, where lease premiums in Manchester have risen 6 percent year‑over‑year.

Investors are responding by reassessing asset allocations, with a growing appetite for mixed‑use conversions that blend office, residential and retail components. Such repurposing can mitigate prolonged vacancy risk while tapping into strong demand for urban living spaces. Meanwhile, developers may prioritize projects that incorporate flexible layouts, advanced building‑systems, and sustainability certifications to attract tenants seeking resilient work environments. The overall outlook suggests that, despite the short‑term supply crunch, the UK office sector will evolve toward more adaptable, value‑added properties that align with post‑pandemic work patterns. Analysts expect that capital inflows into adaptive reuse projects could rise by double digits through 2026, further reshaping the market.