North East
The North East’s construction market is resilient but cautious. Input costs including material prices have largely stabilised while tender price inflation forecasts have increased marginally, particularly at the further end of the range into 2028 and 2029.
Labour shortages, notably in specialist trades such as bricklaying and electrical, are the biggest cost pressure. Activity is steady, supported by public sector and infrastructure investment, with a cautiously optimistic long‑term outlook despite ongoing economic and geopolitical uncertainty.
MARKET CONDITIONS & PIPELINE
Construction sector's medium-term outlook is positive but long-term growth dependent on new investment
Construction activity in the North East remains solid, supported by regeneration and infrastructure projects, although activity softened slightly at the end of 2025. While project starts dipped, planning approvals have improved.
If funding and confidence align, then momentum could gather, although the former still poses a challenge. Major schemes include transport upgrades, city centre regeneration and public sector investment across Newcastle, Sunderland and the wider region.
Looking ahead, the pipeline is strengthened by large strategic projects, such as the Blyth data centre campus, Aykley Heads Innovation District, the next phase of Teesworks, and the commencement of projects associated with the Great North Healthcare Alliance. These schemes are expected to drive demand from 2026 onwards.
Devolution and government support are critical enablers, with long‑term funding settlements, growth funds, housing support and planning reform all designed to accelerate delivery. While much of the market is currently in a mid‑cycle pause, the scale of committed public investment and transformational projects underpins a positive medium‑term outlook.
RLB Market Activity Cycle
The RLB Market Activity Cycle is a representation of the development activity cycle for the construction industry.
RLB considers 10 sectors to be representative of the construction industry as a whole. Each sector is assessed as to which of three activity level zones – peak, mid or trough – best represents the current status of the sector within the cycle. This assessment is then refined by identifying whether the current status is in a growth phase or a decline phase.
The subjective current performance of sectors is identified by ascribing one of the coloured arrows (shown in the legend of the chart) to each sector. NB: In this analysis, sectors are not individually weighted.
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Market sector activity analysis: UK
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of multiple regions enables the calculation of a national representation of percentage of sectors in each phase of the cycle at a point in time.
Market sector activity analysis: NORTH EAST
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of a region enables the calculation of a regional representation of percentage of sectors in each phase of the cycle at a point in time.
TENDER PRICES
- Tender prices in the North East have broadly stabilised, but some near-term uncertainty and volatility are expected.
- A modest uplift in our 2026 forecast has been made since our last report, with further uplifts in 2027 and 2028 as pipeline is expected to come through stronger alongside input cost increases.
▉ RLB North East
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- Labour continues to be the main inflationary pressure, with bricklaying and M&E trades driving wage growth. Materials costs have largely stabilised, although steel and electrical components pose upside risk, particularly when construction phases commence on the major projects referenced above, leading to peak demand levels.
- Fuel prices may play through to some materials depending on how geopolitical events play out.
- Major infrastructure and data centre projects could create localised pressures requiring careful procurement, early engagement and risk management.
CASE STUDY
Weardale Lithium
RLB is supporting the engineering consultant and lead designer, Arup, to develop the scheme proposals for Weardale Lithium’s pilot processing plant at the 35-acre former cement works at Eastgate, County Durham.
We have supported Arup and Weardale Lithium since project inception to provide cost, risk and procurement advice and value management, developing the early order of cost estimates through to RIBA 3 level detailed cost plans to inform optioneering, and considering efficient routes to market for the procurement of the construction works and positioning Weardale Lithium for future phases.
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