Manchester construction starts drop for second year running as headwinds bite

Just 17 schemes broke ground in Manchester and Salford in 2025, down from a record low of 20 the year before. However, pipelines across all sectors remain chunky, according to Deloitte’s annual crane survey.

Seven residential schemes began construction in 2025, including Latimer’s long-awaited Brewery Gardens, four fewer than 2024.

As a result, the number of homes under construction across Manchester and Salford dropped to 8,023, the first time it has dipped below the 10,000 mark since 2016, according to Deloitte’s data.

John Cooper, real estate and infrastructure partner at Deloitte, said regulatory hurdles, including the Building Safety Act and inflation, were playing their parts in suppressing activity.

“Manchester’s residential sector continues to be a key enabler of significant population growth in the city centre, yet faces a critical balancing act,” he said.

“While 2025 saw reduced activity due to inflationary pressures and regulatory changes impacting construction timescales and market confidence, residential construction levels remain strong, reflecting the city centre’s enduring appeal as a beacon for investment and regeneration.”

Latimer’s Brewery Gardens was one of seven resi schemes to start on site. Credit: via Clarion

Residential completions were also down, with 3,422 units handed over in 2025 compared to 4,400 in 2024.

However, 5,500 residential units are expected to complete in 2026, the highest figure since Deloitte’s crane survey began. A further 15,332 homes have planning permission.

“A robust pipeline for 2026 should support continued strong levels, though a more cautious and selective approach from investors means developers must work harder on their proposals,” Cooper said.

“Public sector funding will also be crucial in unlocking projects that support ‘good growth’ amidst ongoing headwinds. A focus on further investment, timely decision making, and labour force skills are essential to driving construction activity.”

The student accommodation market picked up in 2025 with four new starts, taking the total number of PBSA schemes on site to five.

After a barren few years for PBSA delivery – 2023 and 2024 saw no units delivered – 2025 saw 1,803 units completed, including Vita Group’s House of Social at First Street.

Manchester’s PBSA pipeline remains robust with various large developments emerging or securing approval last year. These include Unite and MMU’s Cambridge Halls redevelopment and IQ Student Accommodation’s 2,500-unit reimagination of its Weston Hall and Pendulum Hotel site on Charles Street, which features a 50-storey tower.

Away from residential, three hotel projects started on site last year, up from just one in 2024. The trio of projects – including the W at No2 St Michael’s – brings the number of rooms under construction to 1,621, while 391 new rooms – including Treehouse on Deansgate – were completed in 2025.

There was a welcome return for office development after no new starts in 2024, with Landsec taking the plunge at Mayfield.

The 243,000 sq ft Republic contributes to an accumulated 821,000 sq ft under construction, much of which is refurbishments.

Last year also saw a 17-year-high 1.26m sq ft of office space complete, including No1 St Michael’s, which is fully let, and Island on John Dalton Street.

Overall, there was a 47% drop in office space under construction year-on-year.

There is a further 5.34m sq ft of consented workspace in the pipeline, according to Deloitte.

Landsec’s Republic was the only new-build office scheme to start on site. Credit: Assembly Studios

“Manchester’s commercial office market is characterised by strong demand and low prime vacancy rates,” Cooper said.

“Despite challenges in new supply due to increased capital costs and construction inflation, the market is responding strategically. This includes a focus on high-quality refurbishments, which are meeting demand for flexible workspace alongside more traditional lettings.”

He added: “A combination of these strategic projects and public-private funding models, including support from the Greater Manchester Good Growth Fund, will be crucial for meeting demand and unlocking future development.”

Reflecting on Deloitte’s study, Manchester City Council Leader Cllr Bev Craig said: “The annual crane survey is a useful tool in that it tells the story of our growth, it shows that we are building the right things that help our residents to thrive, and that there is high confidence in our city so investors deliver amazing developments here.”

The Manchester Crane Survey is part of Deloitte’s Regional Crane Survey series, which monitors construction activity within four UK cities, across a range of sectors including office, residential, hotels, retail and leisure, education and student housing.

Across all surveys – Belfast, Birmingham, Leeds and Manchester – 53 new construction starts were recorded in 2025 compared to 47 in 2024.

Of the four cities, only Leeds recorded an increase in construction activity, jumping from eight to 11.