Yorkshire & Humber
City and town centre redevelopment is focal to Leeds and the surrounding areas as local governments work hard to provide quality housing and regenerate areas. Activity in both residential and infrastructure sectors is likely to continue for the foreseeable future, complemented by investment in place-making, entertainment, culture and sport to build economies where people want to work and live.
The Sheffield and wider South Yorkshire region is poised for steady, long-term growth, supported by a diverse economic base and increasing confidence across both the public and private sectors. The city benefits from a strong foundation of public services, two leading universities, and a growing community of healthcare expertise, all of which continue to drive investment and stimulate development activity.
Private sector development remains focused on residential and manufacturing, both of which are pivotal to the region’s economic trajectory. The expansion of advanced manufacturing is attracting significant inward investment.
While regional pricing levels are expected to follow national trends, developers and investors will continue to face the challenge of supply chain and skilled labour shortages, materials fluctuations (in particular, those imported and subject to tariffs) and changes in regulatory requirements.
Overall, while the current market feels subdued in terms of physical activity, the medium‑term outlook is considerably more optimistic, supported by a diverse and maturing pipeline that should translate into increased construction activity from late 2026 onwards.
MARKET CONDITIONS & PIPELINE
Conversion of projects in the region’s development pipeline set to accelerate despite economic challenges
In Leeds, residential schemes are earmarked for almost all outlying areas, with corresponding demands for improved connectivity to employment hubs provided for by investment in public transport, such as the government’s £45bn commitment to Northern Powerhouse Rail. According to Deloitte, the city has seen increases of 12% in general residential and 84% in student accommodation.
New-build office accommodation in Leeds has slowed, with a focus moving to refurbishment and reconfiguration, or even office to residential. In the medium to long term, more significant projects such as Airedale’s new hospital and Microsoft’s Skelton Grange Data Centre project will move from enabling projects to main construction works, and Henry Boot’s 5.5m sq ft Goole Freeport will move from the drawing board to boots on the ground.
The level of construction activity across Sheffield has tempered over recent months, reflected in the noticeably reduced number of tower cranes on the city skyline. This slowdown is likely the culmination of several factors, including the continued impact of the Building Safety Act and the associated gateway approval processes. This has extended programme durations and added a layer of complexity for developers navigating pre‑construction stages.
Encouragingly, the volume of new planning submissions and early‑stage feasibility studies being undertaken by design teams indicates that investor appetite remains strong. Sheffield continues to be viewed as a competitive and resilient location, particularly for residential, mixed‑use, life sciences and public sector programmes. As gateway processes become more efficient and the planned planning reforms expected later in 2026 begin to take effect, we anticipate improved certainty, smoother approvals, and a gradual acceleration in pipeline conversion.
Within the public sector, local authorities, universities and healthcare providers remain particularly active, with several organisations exploring major refurbishment and estate modernisation strategies. This sustained commitment to reinvestment is helping to stabilise the regional workload despite wider economic challenges.
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: UNITED KINGDOM
▲ 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: YORKSHIRE & HUMBER
▲ 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 have stabilised in recent months, with contractors increasingly focused on securing a consistent pipeline of work. As supply chain pressures ease and market confidence gradually improves, we anticipate modest tender price inflation over the next 12 months. However, this is expected to be far more controlled and predictable than the volatility experienced in recent years, enabling clients to plan projects with improved cost certainty.
- Skilled labour shortages and associated wage inflation is both a national and regional challenge, pushing up costs to deliver against an inability of main contractors to absorb the increases. Increase in demand in key sectors, such as infrastructure, is also forecast to attract higher inflationary levels in comparison to less buoyant sectors.
▉ RLB Yorkshire & Humber
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- In previous years, contractors were able to dictate procurement approaches, with negotiated and two‑stage tenders acting as the default for most large or complex schemes. Market conditions have since softened and contractors are now becoming more accepting of alternative tender processes, such as single‑stage tendering, though the industry remains in the early stages of this transition.
- As a result, hybrid models are becoming increasingly common, with contractors offering fixed prices on key elements while adopting a second‑stage process for more volatile or specialist packages.
- With some contractors reporting a slowdown in opportunities towards the back-end of 2025, this may result in a reduced output in 2026 but more starts in 2027, which could increase competition for smaller-scale schemes to secure work in the short term.
- Merchants are reporting that the last 12 months have been challenging, owing to downturns in activity but also smaller margins. Imports continue to be potentially volatile owing to global unrest and uncertainty, with changing tariffs adding to the challenge of forecasting costs.
SECTOR FOCUS
Education
Many higher education providers continue to struggle to balance the books, therefore funding is being allocated to compliance and maintaining existing assets rather than new-build. A number are also preparing for the future by re-assessing site-wide masterplans and this is expected to reinvigorate activity as institutions reshape their facilities to align with emerging models of higher education. In the near term, funding is likely to be steered towards improving residential facilities.
Healthcare
The healthcare sector will continue to be a steady performer. Peaks in activity are expected around New Hospital Programme projects (such as Airedale), as well as the funding announcements expected in May to help address critical infrastructure and building fabric risks. Changes to funding allocation cycles will hopefully make construction work pipelines easier to plan and manage.
Industrial
Speculative industrial development remains limited. However, manufacturing and forging sectors are experiencing renewed growth. Significant investment, particularly linked to defence, advanced manufacturing and national infrastructure, has enabled local businesses to expand and modernise their estates to support rising demand.
Public & Civic
Local authorities across the region remain active investors, focusing on rationalising ageing estates and progressing new community facilities such as sports, leisure and wellbeing centres. Public realm improvements also feature prominently, with efforts directed towards enhancing city centre vibrancy and encouraging increased footfall.
Residential
City centre developments include Leed’s South Bank and Bradford’s City Village which will provide up to 13,000 and 1,000 new homes respectively. Regeneration hotspots such as Kelham Island illustrate the continued transformation of former industrial areas into vibrant mixed-use neighbourhoods. Affordable housing remains a resilient area of activity, supported by strong local authority programmes and continued attention from Homes England. Private residential interest in Sheffield is sustained, but viability challenges – compounded by build cost inflation, planning delays and Building Safety Act compliance – continue to temper delivery rates.
CASE STUDY
Goole Hub
RLB is supporting East Riding of Yorkshire Council with project management, cost management and principal designer services for the redevelopment of East Riding Leisure Goole.
The project – part refurbishment and part new-build – will transform the leisure centre into the Goole Hub, a multi-service centre providing a range of services for the local community.
The new building’s facilities will include an improved gym, a learner pool, a state-of-the-art six-lane bowling alley, and the town’s library.
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