CoStar Group Reports Significant Decline in UK Office Construction

In a recent press release dated July 31, 2026, CoStar Group Inc. shared alarming findings regarding the state of office construction in the United Kingdom. The data reveals that regional office development has reached a staggering low not seen in over two decades, with London emerging as the dominant force in the market.

CoStar’s preliminary data for the second quarter of 2026 indicates that annual office construction starts have plummeted to below 5 million square feet for the first time since at least 2010. This figure starkly contrasts with the 16 million square feet recorded in 2019, when the market conditions were more favorable for development.

Patrick Scanlon, Senior Director of Market Analytics at CoStar Europe, stated, “The fall in construction starts was sharp across the UK regions, at almost 59% below the 10-year average, while London was 57% below average.” Despite this downturn, rising rents for premium office spaces in London have bolstered the case for speculative development in central areas, particularly those with strong amenities and connectivity.

Interestingly, despite the decline in new construction starts, the total office space under construction across the UK has seen an uptick in Q2 2026. This increase is attributed to low completion levels during the first half of the year. However, Scanlon anticipates that construction levels will likely resume their downward trajectory at an even faster pace in the latter half of the year. “Nearly one-third of the space under construction is due to complete by year-end, likely far exceeding new starts over the same period,” he added.

The disparity between construction volumes in London and the UK regions is becoming increasingly pronounced. In 2021, London accounted for about half of all office space under construction; by mid-2026, this ratio has surged to nearly three-quarters, marking one of the highest ratios on record. While regional construction has dwindled to below 6 million square feet—equivalent to just 0.5% of the total office stock—London’s share has risen significantly, reaching 3.7%.

This trend raises important questions about the future of office development in the UK, as the regions struggle to keep pace with the capital.

The insights provided by CoStar Group highlight a critical juncture for the UK’s commercial real estate market. While London continues to thrive amidst rising demand and rental prices for premium office spaces, regional areas face significant challenges that could redefine the landscape of office development in the coming years. As the market adjusts to these changes, stakeholders will be closely watching how the balance of power shifts between London and the rest of the UK.

For further insights and a comprehensive analysis, industry professionals can access the full report on CoStar’s findings.

CoStar Group, a leader in commercial real estate information, analytics, and online marketplaces, continues to provide valuable data to empower stakeholders in making informed decisions as they navigate this evolving market landscape.