North West
Over the past quarter, construction activity across the North West has continued to navigate a landscape of steady but persistent inflationary pressure. While UK consumer inflation has eased, construction‑specific indices remain higher, driven by elevated labour and materials costs that continue to shape the region’s market dynamics.
Labour remains one of the most significant drivers of input cost inflation, with ongoing skills shortages and higher wage obligations placing upward pressure on contractor pricing. Meanwhile, material costs – particularly steel, aggregates and other core inputs – remain volatile due to global supply chain disruptions and fuel‑linked logistics pressures.
RLB’s latest data indicates tender prices in the North West are expected to rise by around 3.5% over the next year, reflecting selective bidding and a focus on risk‑managed procurement routes such as two‑stage tendering. For developers and investors, this means early engagement with contractors, clearer project definition and firmer cost planning will be essential to maintain programme certainty.
In the near term, selective bidding and cautious market sentiment are likely to persist, shaped by regulatory friction and slower conversion of new-build schemes – challenges affecting viability across the UK.
Looking ahead, the region is likely to experience steady but cautious growth. Strong residential demand and sustained commercial activity provide a positive outlook, though planning delays and global uncertainties will continue to influence market confidence and delivery timelines.
MARKET CONDITIONS & PIPELINE
Positive outlook for construction markets in Manchester and Liverpool despite bottlenecks in development pipeline
Over the last financial quarter, onsite construction activity across the Manchester City Region has reflected a market adjusting to persistent headwinds while still underpinned by a notably strong development pipeline.
Only 17 new schemes broke ground in Manchester and Salford during 2025, down from 20 the previous year, indicating a continued cooling in new construction starts driven by inflationary pressures and regulatory constraints, particularly those linked to the Building Safety Act. Despite this slowdown, almost 60 projects remain active on site, highlighting that the region continues to sustain a significant baseline of ongoing construction activity.
Planning activity remains high, with Manchester City Council continuing to process a significant volume of applications – 67 applications updated in one week in February alone, including a mix of new residential proposals, listed building works and condition discharge applications. This steady flow indicates sustained developer interest, even if conversion to starts remains challenged by cost volatility and planning system bottlenecks.
Looking ahead, the wider pipeline is reinforced by several high‑value projects scheduled to mobilise over the coming year, such as Crown Street Phase 3 (£570m), the Cambridge Halls redevelopment (£400m) and the Manchester Digital Campus (£310m). These schemes underline strong investor confidence in Manchester’s long-term fundamentals and are expected to support a gradual strengthening of onsite activity through 2026.
Construction activity across the Liverpool City Region remains steady but subdued, reflecting the broader UK pattern of slower project conversion, prolonged viability testing, and cautious decision‑making among both public and private sector clients.
National market intelligence shows that forward pipelines are under strain, with delayed public sector approvals and protracted regulatory processes limiting momentum across new‑build programmes. These factors continue to shape activity in Liverpool, where developers remain sensitive to elevated input cost inflation and ongoing labour constraints.
Onsite construction activity is being sustained primarily by regeneration‑led schemes, infrastructure upgrades and essential public sector programmes. Although private housing nationally has experienced a 12% decline in new orders, infrastructure workloads have risen by more than 24% year‑on‑year, providing a stabilising effect in regions like Liverpool where major transport, public realm and renewal initiatives form a significant part of the construction profile.
The medium‑term pipeline shows encouraging signs. National forecasts indicate strengthening output from 2026 as deferred schemes begin to progress and wider infrastructure investment filters through regionally. This aligns with the Liverpool market, where local authorities and development partners continue to advance key regeneration frameworks, supporting a wave of future residential, mixed‑use and public realm projects expected to come forward as financing conditions gradually improve.
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 WEST
▲ 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 West continue to be shaped by a combination of persistent labour cost inflation, selective contractor bidding behaviour, and cautious market sentiment.
- Contractors are increasingly adopting two‑stage tendering models, prioritising risk management and early engagement to protect margins in a climate marked by high labour and materials costs. This approach reflects wider pricing pressures across the region, where skilled labour shortages remain a defining challenge.
- Over the next 12 months, tender prices in the region are expected to rise steadily within the 2% to 4% range, driven by labour constraints, risk‑managed procurement, and sustained investor caution.
▉ RLB North West
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- Main contractors in the region are maintaining a cautious approach to pricing, balancing the need to remain competitive with the pressure of rising labour and materials costs. They are increasingly adopting two‑stage tendering and prioritising repeat business, reflecting a focus on risk control and stable pipelines rather than aggressive bidding.
- Labour continues to be the most significant driver of inflation, with persistent shortages in specialist and white‑collar roles escalating wage pressures and impacting delivery confidence. Plant and MEP‑intensive trades also face elevated inflation due to limited specialist capacity and high demand in sectors such as health and data infrastructure.
- Material price pressures are more uneven. Steel reinforcement prices have fallen by 8.1%, offering relief on concrete and groundwork packages, while aggregates and timber remain elevated. Looking ahead, major public sector and infrastructure schemes expected from 2026 are likely to intensify labour and material pressures, increasing pressure on the supply chain.
SECTOR FOCUS
Commercial
Commercial activity remains steady but cautious, influenced by rising input costs, investor sensitivity and a slower conversion of new project starts. National intelligence shows that viability pressures and financial uncertainty continue to delay commercial commitments, even as materials availability improves. However, sustained demand for high‑quality workspace and the stabilising effect of modest tender price inflation through 2025/26 support a measured but resilient outlook.
Education
Education construction remains stable, supported by long‑term public investment and regeneration initiatives incorporating new schools and learning facilities. While the sector does not experience the same volume as residential or commercial, demographic expansion and public sector commitments continue to generate steady, predictable demand for modern, high‑quality learning environments. National indicators suggest that public programmes provide a floor for construction activity amid wider market uncertainty.
Healthcare
Healthcare construction activity is underpinned by ongoing NHS investment across the North West, helping maintain regional output. Delivery pressures persist due to MEP‑intensive requirements and specialist labour shortages, which continue to drive inflation within the sector. Nevertheless, long‑term demand for upgraded hospitals, clinics and medical infrastructure ensures healthcare remains stable, with gradual growth expected as national capital programmes progress.
Logistics & Manufacturing
The North West’s logistics and manufacturing sector continues to benefit from national investment priorities in advanced manufacturing, digital technologies, clean energy and defence, all identified as high‑growth clusters. While growth is not uniform, the region’s strategic employment land and industrial ecosystem continue to support solid activity across warehouse, manufacturing and tech‑enabled production projects.
Public & Civic
Construction in this sector is buoyed by sustained government investment, with public sector programmes providing stability amid broader market uncertainty. National data shows delayed approvals continue to affect new starts, yet public expenditure remains a key anchor for regional output. Infrastructure‑led growth and ongoing regeneration programmes are set to support further public realm, civic and community developments as medium‑term confidence improves.
Residential
Residential activity in the region remains subdued, reflecting national viability pressures, labour shortages and planning‑related delays. UK‑wide declines in private housing new orders – down 12% year‑on‑year – continue to suppress new‑build momentum locally. However, forecasts indicate strengthening output from 2026 as deferred schemes progress and financing conditions stabilise. Regeneration‑led housing frameworks are expected to underpin medium to long-term growth despite short‑term constraints.
CASE STUDY
Training and Development Academy
RLB’s cost management expertise was integral to the delivery of a new £40m training and development academy for Merseyside Fire and Rescue Service (MFRS).
The state-of-the-art facility, the UK’s most technologically advanced emergency service training site, will equip Merseyside’s firefighters with the skills and knowledge they need to save life and property in a range of fire and rescue scenarios.
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