Regional Rebound: How diversification is unlocking office opportunities

The tide turned for Canary Wharf last week. A landmark deal for Visa’s European HQ and expanded leases from BBVA and SmartestEngery set the scene, before HSBC topped the lot and U-turned on its proposed exit from the docklands. Producing a drumbeat of positive news, the rapid-fire Canary Wharf Group PR machine showcased both the value of communications expertise in shifting perceptions and how offices can win headlines.

HSBC’s Canary Wharf one-eighty owed to desk shortages at their City space because of a return-to-the office mandate. While workplace policy updates drive clicks and engagement in the media, peel back the layers and these trends are influencing the market in other ways. And it’s not just in the capital – the office market is bubbling away outside of London too. So what’s happening in the UK offices market in and out of news, and where is it heading?

Regional office markets are performing robustly. Recent figures from Avison Young’s Big Nine report indicate that national take-up in H1 was the strongest half-year performance since 2019. City centres have been responsible for the bulk of activity, with strong occupier demand for best-in-class and highly connected spaces. Unchallenged by significant development pipelines in most regional cities, refurbished buildings that provide strong sustainability credentials are now experiencing rental growth.

Together, consolidated demand, restricted supply and signs of yield compression are setting the mood lights for investors. Some are already taking the punt, Savills data shows that 2025 Q1 investment volumes were 15% up year-on-year in regional office markets. Cuts to interest rates should bump up this investment activity, with H2 likely to see office transactions across the UK’s major cities.

Critical supply shortages are impacting sub-markets beyond city centres though. In some regional markets, notably Bristol, out-of-town leasing is outperforming central locations. For some towns, higher rates of car ownership and access to green spaces have always factored into the pull of out-of-town locations for employees.

Many regional cities are characterised by bands of business parks, industrial estates and office complexes that offer reasonable rents and floorplates unrestricted by urban density. It’s an appealing offer to occupiers that need big footprints, particularly against the backdrop of limited choice and growing prices in city centres. Six of the ten largest leasing regional deals in 2025 have been made in out-of-office markets, up from zero for the same period last year.

In some regional locations, the growing attractiveness of out-of-town locations has been coupled with growth in specific sectors. The impact is a vacancy rate slashing resurgence in the peripheries of some cities, moulded by one or two industries.

Conflict, geopolitical uncertainty and the promise of boosted government budgets has encouraged the UK’s defence sector to take-up significant office space in 2025. Maybe it’s the idea of being away from prying eyes, as well as the extensive square footage, that has seen defence occupiers cluster in Reading’s out-of-town business parks.

Whether it’s the hustle of city or out-of-town spaciousness, the diversification of regional office markets is creating a palette of opportunities for investors and occupiers. As the government continues to prioritise regional economic growth, embracing this diversification with agility will allow stakeholders from all sides to unlock value and shape the future of workspaces.