Regional office investment hits highest first quarter in four years

Global commercial real estate advisor Avison Young has released new analysis of the UK’s Big Nine office markets, revealing that investment transactions totalled £477m in Q1 2026, representing the strongest first quarter for investment since 2022.

Investment volumes were boosted by three transactions over £50m, including the Bank of New York Mellon’s £114m owner-occupier acquisition of 4 Angel Square, Manchester. Melford Capital also purchased its third regional office in three years - Waverley Gate, Edinburgh - for £78m, signifying increased confidence in the UK’s regional office markets.

Manchester and Bristol were the best performing cities for leasing activity in the first quarter of 2026. Take-up in Manchester reached 446,200 sq ft, where the Government Property Agency (GPA) let 115,000 sq ft at Havelock ahead of a planned digital campus opening in 2032, which was the largest leasing transaction of the quarter.

In Bristol, Graphcore signed for 68,504 sq ft at 1 Georges Square and Diligenta inked a deal for 68,023 sq ft at Lakeview, contributing to a total of 267,127 sq ft of space leased in the first quarter of the year, the second highest in the Big Nine.

Birmingham and Bristol saw the largest jump in prime rental growth, with both cities reaching £52 per sq ft, representing 12% and 4% growth quarter on quarter, respectively. Across all markets, average prime rents increased 2% to £41.56 per sq ft, with rents continuing to rise in locations with the strongest ESG credentials, transport connectivity and efficient operational costs.

The sectors driving overall occupier activity included professional services (26%), government and services (19%) and TMT and creative (17%). Alongside semiconductor firm Graphcore’s Bristol lease, other large deals in these sectors included EY taking 36,209 at Edinburgh’s Haymarket Square.

For occupiers in search of best-in-class space, Grade A vacancy remains constrained at 2.7%, despite a quarterly increase of 50 bps. 2.7 million sq ft of office space remains under construction across the Big Nine, with a spike in completions due for 2027. Recent Avison Young analysis shows that development completions are expected to fall over the next three years, with competition for high-quality space sustaining upward pressure on rents in key UK cities.

Guy Spencer, Director and Head of National Capital Markets at Avison Young, said:
“The first quarter has set a strong tone for the year, with confidence building across regional markets such as Manchester, Bristol and Edinburgh. Appetite for prime, centrally located assets with secure income remains resilient, particularly where supply and demand imbalances are most acute, continuing to place upward pressure on rents. At the same time, constrained development pipelines across the Big Nine are reinforcing competition for high-quality space.

“Looking ahead, the market is entering a more nuanced phase. Heightened global headwinds are expected to keep inflation elevated, which is likely to sustain higher borrowing costs for longer. This may temper activity among debt-reliant investors and weigh on larger transactions, although well-capitalised buyers with a long-term view will continue to find opportunities.”

Rupert Barron, Director, Manchester Office Agency at Avison Young, added:
“Manchester continues to set the pace as the strongest regional office market outside of London, underpinned by sustained demand for best-in-class, city centre space. The Government Property Agency’s full letting at Havelock is a clear example of the scale and confidence we’re seeing, with major occupiers considering early commitment to developments, as seen at St Michael’s or Circle Square, and rumours surrounding the 800,000 sq ft Manchester Digital Campus planned for 2032.

“More broadly, this trend is playing out across other regional markets, where high-quality supply remains limited and competition for Grade A space is intensifying. Cities like Birmingham, Bristol and Glasgow are seeing similar dynamics, with strong fundamentals, including connectivity and talent bases, continuing to attract occupiers and support further growth in activity.”

You can read the latest Big Nine report here.