Office space shortage: Growing businesses may be ‘forced to stand still’ without more Grade A development

Cushman & Wakefield report says Birmingham, Edinburgh, Leeds and Manchester seeing shortage of premium space

Key cities in the UK are at risk of running out of premium office space within months, a new report from property giant Cushman & Wakefield has shown.

The firm’s latest National Office Moves report shows businesses expanded across all regions and office size bands in 2025 – a positive change on previous years when some areas reported downsizing. More than twice as many office occupiers who moved in 2025 expanded their footprints, rather than reducing them.

But it showed that dwindling Grade A supply caused by a lack of new developments means space is at a premium in the areas measured – with premium space in Birmingham, Edinburgh, Leeds and Manchester likely to be absorbed in under a year.

The report analyses the UK’s ‘Big Five’ regional markets of Birmingham, Bristol, Edinburgh, Leeds, and Manchester, as well as the South East.

It showed that of the 228 office deals by existing office occupiers, 156 saw footprint growth. That led to a net expansion of 668,900 sq ft in 2025.

C&W said that whether expanding or contracting “occupiers overwhelmingly consolidated into high-quality, amenity-led offices – with 181 transactions (123 expansions and 58 contractions) for Grade A space, highlighting the clear preference for premium space”. It added: “However, this focus on the best has eaten into dwindling Grade A supply which has been impacted by a lack of new development”.

Charles Dady, head of national office agency at Cushman & Wakefield, said: “At the start of this year Birmingham, Edinburgh, Leeds and Manchester – four of the Big Five markets – had less than one year’s supply of Grade A office space available. If the demand we are seeing continues, that could all be absorbed within the next 12 months.

“In practice, the supply shortage is likely to force some occupiers, who would like to move, to extend or regear their existing leases while waiting for new stock to be delivered. Without urgent investment in new, high-quality offices, occupiers will be faced with little choice but to stand still.”

Manchester accounted for 86% of deals and delivered a net gain of 308,500 sq ft. Edinburgh, Birmingham, and Leeds recorded what C&W called a “more modest but still positive” net expansion. The South East saw a “significant” net contraction in 2024 but a net gain of 182,900 sq ft in 2025.

The biggest growth sector was technology, which contracted in 2024 but last year saw a net expansion of 241,200 sq ft. Science and innovation also rebounded from having the largest net contraction in 2024 to seeing a net expansion of 146,200 sq ft in 2025, while other growth sectors included media and healthcare.

The insurance sector saw the most contraction in 2024, driven by “significant downsizing transactions in the South East”. Other sectors that saw net contractions were business services, manufacturing and energy.

Large scale occupiers drove the expansionary trend, with all activity over 100,000 sq ft seeing occupiers taking more space.

The biggest single regional office deal of 2025 was BAE Systems growing its presence by 155,500 sq ft across two buildings at Green Park, Reading, under the Global Combat Air Programme.

Other landmark Big Five lettings included Auto Trader taking 130,000 sq ft at 3 Circle Square in Manchester, growing its footprint in the city. In Bristol, law firm Burges Salmon renewed at One Glass Wharf to take the whole building with an extra 41,600 sq ft of space.

Joshua Woolnough, senior research analyst, regional offices, Cushman & Wakefield, said: “Increased demand for larger, higher-quality office space reflects trends that we first highlighted in the Central London market last year. Growing confidence in the value a premium workspace provides to businesses and staff is now evident in the regional data too.

“Occupiers that reduced their office space during the Covid pandemic are now expanding again, with more than 80% of occupiers whose previous move occurred post-2020 choosing to expand when relocating in 2025.”

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