The latest Deloitte Crane Survey has painted a complex but ultimately resilient picture of Manchester's construction sector, revealing both challenges and significant opportunities across key development areas. While inflationary pressures and regulatory changes have impacted some markets, the city maintains a robust pipeline of building projects that promises continued growth throughout 2026 and beyond.
Residential Sector: Navigating Challenges with Strong Future Pipeline
Manchester's residential construction experienced a noticeable slowdown in 2025, with new starts dropping to just seven schemes compared to eleven in the previous year. The total number of units under construction fell below 10,000 for the first time since 2016, settling at 8,023 units, while 3,422 residential units were completed throughout the year.
However, the outlook for 2026 appears considerably brighter. Approximately 5,500 residential units are expected to complete this year, representing the second-highest figure since the Manchester Crane Survey began its monitoring. Furthermore, an additional 15,332 homes have already secured planning permission, indicating substantial future development capacity.
John Cooper, real estate and infrastructure partner at Deloitte, commented on this mixed residential picture: "Manchester's residential sector continues to be a key enabler of significant population growth in the city centre, yet faces a critical balancing act. 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."
Commercial and Hospitality: Diverging Trends Across Sectors
Office Market Shows Resilience Despite Limited New Starts
The office sector demonstrated remarkable strength in 2025, delivering one of the highest completion rates on record with 1.26 million square feet coming to market – the highest level since 2008. Despite only one new office start during the year (the Republic at Mayfield scheme), the market maintains a healthy pipeline with 5.34 million square feet of space that has secured permission but remains unbuilt.
Mr Cooper elaborated on the office market dynamics: "Manchester's commercial office market is characterised by strong demand and low prime vacancy rates. 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."
Hotel Construction Boosted by Major Venue Openings
The hospitality sector experienced significant growth, with three new hotel schemes commencing construction in 2025. This expansion has been largely driven by the openings of major venues including Co-op Live and Aviva Studios, which have substantially boosted Greater Manchester's visitor economy. Currently, 1,621 hotel rooms are under construction across the city, with 391 new rooms completed during 2025.
In the retail sector, 287,000 square feet of space remains under construction, further supporting Manchester's growing appeal as a destination for both visitors and residents.
Student Accommodation: Renewed Growth After Quiet Period
After several slower years with no new bedspaces delivered in 2023 and 2024, the student accommodation sector experienced renewed growth in 2025. Four new schemes started construction during the year, bringing the total number of schemes under construction to five, which will deliver 3,894 bedspaces to market. Additionally, 1,803 new bedspaces were completed in 2025.
The education sector itself continues to transform Manchester's landscape, particularly along the Oxford Road corridor. Over the past fifteen years, three million square feet of new education and research facilities have been constructed, with another 2.1 million square feet currently in the development pipeline.
Regional Context and Future Outlook
Deloitte's Regional Crane Survey, which monitors construction activity across Manchester, Belfast, Birmingham, and Leeds, recorded 53 new construction starts in 2025 compared to 47 in the previous year. In Manchester specifically, new starts decreased from 20 in 2024 to 17 in 2025, while on-site projects under construction remained substantial at 58.
Looking ahead, Mr Cooper emphasised the importance of strategic approaches and public sector support: "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. 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 combination of strategic projects and innovative funding models, including support from the Greater Manchester Good Growth Fund, will prove vital for meeting demand and unlocking future development across all sectors of Manchester's construction industry.
