INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
North East
The North East region overall is performing well, albeit cautiously, with investment continuing to flow into regeneration, housing and infrastructure projects from both private and public funding sources.
The support from the North East Combined Authority is contributing to the positive outlook, with funding being secured for some landmark regeneration schemes which is boosting confidence in the region and across the construction industry.
Managing the labour shortage will be key over the coming months, as well as navigating the national uncertainty surrounding inflation and material cost increases.
MARKET CONDITIONS & PIPELINE
Construction sector reporting positive level of activity and pipeline
The North East’s construction sector overall shows modest growth but is reporting a positive level of activity and pipeline moving into the second half of 2025.
Key infrastructure and regeneration projects are advancing, such as the A1 widening between Birtley and Coal House. Newly completed is the Keel Crossing, a pedestrian and cycle bridge over the River Wear in Sunderland.
Development pipelines are presenting a mixed forecast: project starts have remained strong but contract awards and planning approvals have shown only very modest growth in the last quarter.
Labour demand remains high in the region and, as per the broader UK picture, material shortages and input cost increases remain a threat to future growth.
With project starts generally on the increase, the outlook is positive for contractors of all scales. Tier 1 contractors still favour two-stage tendering opportunities over single-stage opportunities, while smaller contractors prefer a single-stage approach. Recent opportunities issued via frameworks have attracted strong interest as well as further highlighting the preference of large contractors for two-stage tendering.
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 construction sector are expected to remain constant over the next 12-month period.
▉ RLB North East
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- There is a strong demand for bricklayers in the region due to ongoing housing development works and new commercial projects.
- Electrical subcontracting is another heated trade due to the increased demand on all electric solutions for new builds as well as restoration schemes in the public & civic sector.
SECTOR FOCUS
Infrastructure
The restoration of the Tyne Bridge will be completed in time for its centenary year in 2028. North East Combined Authority has confirmed that more than £6m will be provided in funding to complete works that have already commenced on site.
Public & Civic
The sector continues to see strong growth and starts with local authorities receiving additional funding to enable them to greenlight projects. The restoration of the Grainger Market in Newcastle city centre continues to progress along with works on the Pilgrim’s Quarter redevelopment.
Residential
Residential starts continue as per the wider UK trend with growth in the last quarter. One key project that has commenced is a programme by Gentoo that will see more than 750 homes in Sunderland benefit from modernisation this year, including the installation of new bathrooms, kitchens and full electrical rewire work. The £170m contract was awarded to PHS Solutions, Esh Construction and RE:GEN Group to deliver improvement to thousands of homes across the city over 10 years.
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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