Numbers of hotel rooms under construction across four of the UK's leading regional cities increased by more than 50% last year, while high-quality refurbishments dominated office starts, Deloitte’s Regional Crane Surveys show.
According to annual construction activity data collected by the firm across Belfast, Birmingham, Leeds and Manchester, there were 2,564 hotel rooms under construction in 2025, compared with 1,680 rooms the year before, reflecting a circa 53% increase.
The 2025 total also beat the figure for 2023 and 2022, when there were 1,604 and 2,144 hotel rooms under construction respectively. Manchester led the way with hotel room starts last year, claiming 1,181 of the total.
Deloitte noted that work started at five hotel schemes across the four cities last year, with three commencing in Manchester. This was two more than last year and one more than in 2023.
But the number of hotel rooms completed in last year dropped to 584 units, down from 652 units the previous year. But it equalled hotel room completions in 2023.
Analysts at Deloitte said the increase in the number of hotel rooms being constructed across the four cities reflected developers' focus on "culture and the visitor economy".
Quality refurbishments
Circa 2 million square feet of offices got underway last year, a decrease from 2.8 million square feet the year before and 3.4 million in 2023.
While the amount of office space under construction fell to a four-year low, the amount of accommodation delivered increased marginally to 1,794,059 square feet in 2025, up from 1,786,634 square feet in 2024. It was also more than the 1,769,630 built in 2023.
Developers began seven schemes across the whole of 2025, with Manchester leading the way with three of those schemes, while Birmingham had two. The seven schemes that got underway was four less than the same figure in 2024 and lower than the 14 which started in 2023.
Across the residential sector, 21,687 units were under construction last year, with 8,885 units completed. This represents a decrease from 23,673 units and 9,075 completions the previous year.
Residential developments made up more than half of all new starts across the four cities last year, as 27 schemes began, up five compared with last year. Eight student housing schemes were started, while there was one new start in retail or leisure.
The 53 new projects start figure across all sectors was higher than the 47 recorded in 2024, but lower than the 64 schemes that commenced in 2023. Despite the increase in project starts year-on-year, the volume of units and floorspace under construction fell across the board due to the smaller scale of new starts, Deloitte said.
Deliverability challenges
John Cooper, infrastructure and real estate partner at Deloitte, said in a statement: "In 2025, the construction sector had to navigate several challenges including complex economics, with higher costs and new building regulations such as the Building Safety Act contributing to deliverability challenges.
"However, we have seen the impact of strategic public and private sector investment and collaboration, supplemented by developer sentiment shifting from cautious optimism to committed construction in a number of cases.
"Our research indicates a resilient pipeline, with healthy forward-looking activity across the student accommodation and hotel sectors and a more positive outlook into 2026 across the offices and residential sectors.
"Continued focus on strategic investment, timely decision making and labour force skills to support construction delivery is key to catalysing the opportunities that exists across these cities.”
City breakdown
In the Midlands, Birmingham recorded 23 new starts on site, a substantial increase from 11 in 2024 and the highest number in five years. Deloitte said this surge in activity has led to 40 developments under construction across the city centre.
A total of 17 residential schemes broke ground in last year, up from six in the last survey, meaning Birmingham now has 6,822 residential units under construction, the second most after Manchester, which has 8,023.
The report also showed the city had 477,223 square feet of offices completed across six schemes, with an additional 733,912 square feet under construction across five schemes, mainly through major refurbishments, which represented 73%.
In Manchester, circa 1.2 million square feet commercial office space was delivered in Manchester and Salford last year, the highest since 2008, when it reached 1.4 million square feet.
Refurbishments accounted for a 68% share of the city's office pipeline, up from 30% compared with a decade ago, continuing the regional trend of developers looking to revamp existing schemes.
Zoe Davidson, infrastructure and real estate partner at Deloitte, added: "While challenges remain in the commercial real estate sector including increased capital costs and construction inflation, the market is responding strategically.
"Our survey shows a clear focus on high-quality refurbishment of offices, with strong take up of the best quality office space. We would expect headline rental levels to rise in 2026, which may help to unlock further office schemes.
"Elsewhere, cities are responding to the challenges of providing quality bedspaces for their student population and young professionals, while a focus on culture and the visitor economy has underpinned new hotel and retail and leisure schemes."