Midlands construction sector more dynamic than national picture, new report shows

Construction market intelligence from independent Midlands’ construction and property consultants, Rider Levett Bucknall (RLB UK) reveals that the Midlands market is exhibiting a more dynamic curve than the national picture. 

Growth is being propelled by the private housing and industrial sectors with project starts in the East Midlands surpassing £2.6 billion, reflecting a 104 per cent increase compared to the same period in the previous year. 

The West Midlands is also experiencing a significant boost in the pipeline of commercial projects, including notable office developments such as the Colmore Gate office scheme (consented on second attempt).

Moreover, the leisure and hotel sectors are witnessing strong growth, with several large-scale projects currently underway.

The ongoing Midland Main Line upgrade is improving regional connectivity, while residential developments such as the One Eastside skyscraper are contributing to Birmingham’s urban transformation.

Macro-economic events, including the US imposition and relaxation of tariffs, have dampened investment confidence, with knock-on effects in UK construction.

However, with markets looking like being well on the way back to the highs of the turn of the year and expanding data centre growth, there is cautious optimism in the sector ahead of the Spending Review on 11 June.

While the recently signed UK trade deal has eased some international trade pressures, its impact on construction is felt to be limited.

Industry stakeholders are now turning to the Spending Review on 11 June for signals on public investment and pipeline priorities.

In a current tight labour market with overall low levels of unemployment and ongoing shortages of skilled and unskilled labour, new workload distribution and local availability of labour could hold the key to whether any influx of project work could result in tender price breakout.

Also, while public-private partnerships (PPPs) might be the financial injection needed for momentum, PPP solutions can be time-hungry, so what presents as an easy economic solution may not be all that straightforward.

BCIS’s forecast input costs to rise by 4.15 per cent in 2025 – far outpacing tender price growth.

RLB’s weighted average for the year of 3.22 per cent, falls short of cost inflation, raising concerns about squeezed contract margins in an already competitive landscape. 

Brook Smith, Partner at RLB Midlands said: “Economic indicators in the Midlands construction market demonstrate robust activity, particularly in housing, commercial and industrial sectors.

“While the sector shows resilience, challenges such as labour shortages and rising material costs persist.

“Nevertheless, the positive momentum in project approvals and starts suggest a cautiously optimistic outlook for the remainder of the year and continued investment in infrastructure and residential projects further underscores the region’s growth trajectory.”

Click here to read RLB’s full Construction Market Intelligence Q2 2025.