INSIGHTS
Construction Market Intelligence
UK Edition
Q3 2025
North West
The North West’s construction industry is currently experiencing mixed conditions. While the overall UK economy shows slight growth, construction output in the region is forecast to be modest, driven in part by the improving, though cautious, recovery in the private housing and commercial sectors.
Challenges remain, including ongoing high costs for materials and labour, a need for clarity on planning reforms and government policy, and a persistent skilled worker shortage. Despite these headwinds, infrastructure and NHS-related projects, alongside new commercial opportunities, are expected to sustain construction activity in the short to medium term.
MARKET CONDITIONS & PIPELINE
Market sees potential for future growth but challenges persist
The current sentiment of the construction market in Manchester and the Liverpool City Region is one of optimism tinged with realism due to persistent structural challenges.
Manchester continues to be a stronghold for residential development, although construction output has declined compared to previous years. There has been a positive trend in detailed planning approvals, suggesting potential future growth despite a 26% drop in project starts in late 2024. Notable commercial developments are progressing, indicating resilience in this sector.
Liverpool has seen an upturn in commercial office deals, though from a relatively low base. Liverpool City Council has applied for New Town status for Liverpool North to stimulate its regeneration.
Output in the North West rose by 0.5% in Q4 2024, driven by a 1.2% increase in new work. However, main contract awards fell by 36%, highlighting challenges in converting planning into active projects. Around 4,500 planning consents are awaiting determination across the region, reflecting both demand and planning system bottlenecks.
The region’s main contractors are navigating a complex pricing environment shaped by cautious optimism, strategic bidding and persistent cost pressures. Many of them are adopting two-stage tendering models and prioritising repeat business. This allows for better risk control and early client engagement, though it may shift inflation risk onto the supply chain.
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 are expected to rise by approximately 3.5% over the next 12 months, driven by sustained demand and inflationary pressures on materials and labour.
▉ RLB North West
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors' range (High & Low)
INPUT COSTS
- There is high demand for labour, the rising costs of which is a major inflation driver.
- Materials availability is stabilising, but still volatile, with a moderate impact on inflation. Plant costs are stable, partly due to bottlenecks on infrastructure projects.
- The busiest trades with high workloads are infrastructure, M&E, façade and retrofit. Residential and general fit-out trades are quieter.
SECTOR FOCUS
Commercial
Office refurbishment and extension activity rose 32% in 2024, with 1.6 million sq ft completed or underway. Manchester continues to outperform regional rivals in office lettings, driven by demand for sustainable and well-located workspaces. While Liverpool has fewer headline office developments than Manchester, it is seeing growth in commercial refurbishment and mixed-use regeneration, particularly around the Liverpool Waters and Knowledge Quarter areas.
Data Centres
Manchester is emerging as the UK’s secondary data centre market, driven by overflow from London and increasing demand for digital infrastructure.
Logistics & Manufacturing
Greater Manchester currently has only three logistics units over 100,000 sq ft under construction, indicating a constrained development pipeline. Despite low supply, demand remains high, especially around Trafford Park and Manchester Airport. Merseyside and the Wirral are seeing more logistics development activity compared to Manchester. Logistics developments face delays due to power supply issues, particularly for HGV EV charging infrastructure.
Residential
Residential construction starts in the North West rose by 27% in the three months to July 2025, standing 18% higher than the same period in 2024. This growth was driven primarily by private housing, with starts up 24% quarter-on-quarter and 40% year-on-year. In contrast, social housing starts declined by 33% compared to the previous quarter and 24% year-on-year, indicating a slowdown in public sector-led development.
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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