INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
Midlands
While material cost inflation has eased, cumulative cost levels remain high compared to pre-pandemic levels which could deter speculative schemes. The region’s strong infrastructure pipeline should drive growth and open up new opportunities.
Contractor appetite in the Midlands remains high, offering clients opportunities to secure competitive tenders on their construction projects. However, inflationary pressures and persistently low margins are driving contractors to seek contractual terms which give them greater protection.
We’re seeing a growing appetite for true partnering approaches, where shared risk can unlock mutual value. Tender price increases signal the need for investors to act decisively – delaying decisions may only mean paying more later.
MARKET CONDITIONS & PIPELINE
Growth of region’s construction sector expected to continue into 2026
In comparison with the rest of the UK, the region’s construction sector has currently good momentum and a strong and balanced pipeline of work. We anticipate growth to continue into 2026.
The market in Birmingham is leading the way with major residential high-rise projects, including the Octagon, the world's first purely octagonal high-rise residential building, and One Eastside which, alongside the Octagon, will become the joint-tallest building in Birmingham.
Another landmark scheme is the Drum development above New Street Station, which will transform the former John Lewis store at Grand Central into 200,000 sq ft of office space for up to 2,000 workers. Hotel and leisure schemes also appear buoyant with an increase in planning approvals.
Infrastructure projects have high visibility, including HS2, but all subsectors are showing ongoing promise of growth into 2026. It is hoped that reforms to the Nationally Significant Infrastructure Projects (NSIP) regime will further accelerate major approvals, adding clarity for large-scale projects.
Main contractors in the Midlands face thin margins due to labour and materials inflation and high competition. In light of this, we envisage contractors adopting selective tendering approaches, and where possible favouring two-stage and negotiated strategies to safeguard profitability.
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: MIDLANDS
▲ 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 price inflation continues to rise upwards at 3% to 4% per annum, with this trend set to be maintained to 2029.
▉ RLB Midlands
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- There is strong demand for masonry, plumbing, electrical and carpentry trades, with long lead times and persistent staffing shortages.
- By contrast, finishing trades are reporting slightly less demand.
- Steel costs remain relatively stable. Concrete prices remain modest. MEP prices face cost uncertainty due to volatility of global supply pressures, component availability and energy prices.
SECTOR FOCUS
Commercial
Projects starts have been rising with schemes such as the landmark Colmore Gate development in Birmingham getting underway, driven by growth in residential and infrastructure projects which is helping to drive commercial demand. We anticipate continued growth in this sector for the coming years.
Infrastructure
A robust pipeline exists for the region’s infrastructure projects, including West Midlands Metro extension, Midlands Main Line electrification, and the new Automated People Mover (APM) system which will move passengers between HS2’s Curzon Street railway station, Birmingham International railway station, the National Exhibition Centre (NEC), and Birmingham Airport.
Logistics & Manufacturing
The mid-box logistics subsector remains strong, although the number of new speculative builds has reduced. Demand persists for modern warehousing amid reduced speculative starts. Project starts appear to be anchored on pre-let deals.
Residential
New starts in residential build-to-rent projects have experienced a noticeable slowdown. This is largely due to investor caution surrounding the new Building Safety Act gateways, coupled with a surge in recent completions that have increased supply. As a result, many have had to pause new starts despite a robust pipeline of planning consents. Looking further ahead, however, the longer-term market outlook appears more optimistic. Many developers remain keen to progress and are eager to initiate new projects as opportunities arise.
School of Architecture and Built Environment
The School of Architecture and Built Environment, or SoABE, boasts 21st century teaching and learning spaces – design studios, digital facilities, specialist labs and immersive lecture theatres – all set against a spectacular heritage backdrop.
RLB held a dual role over the course of the project, acting as both external and client-side project manager. Deeply embedded in the university’s team, our team understood the project inside and out, working closely with academic departments, facilities management teams, contractors and the community.
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