BE News asked leaders from across the built environment industry to share their hopes, fears and expectations for 2025. A whopping 125 of you responded, so to make this year’s mega forecast more digestible, we have broken it down into parts and will publish a fresh selection of ‘25 for ’25’ every day this week. Enjoy part two!
Josie Parsons
Chief executive, Local Space
With record numbers of people in temporary accommodation in the current economic climate, we expect 2025 to be a very challenging year for people facing homelessness. Constraints on housing supply are likely to become more acute for councils looking to procure suitable accommodation, due to uncertainty within the private rented sector coupled with a decline in new affordable housing. This will mean that many councils will be chasing a diminishing pool of available properties. In addition to the social implications, this will place an even greater strain on local authority budgets.
We welcome the proposals to increase capacity within the planning system. However, a greater proportion of council funding will continue to deal with the symptoms of the housing crisis, rather than addressing the cause. In response we need to consider affordable housing acquisitions as well as new build in the short to medium term.
Michael Riordan
Managing director, Linesight UK
2025 is likely to see growing pressures on the supply chain as AI and high density computing drive demand for powerful and yet energy-efficient data centre infrastructure. An engaged, collaborative approach as well as forward planning will be essential throughout to keep costs and delivery on schedule.
UK deputy prime minister Angela Raynor’s decision in December to overturn the county council’s refusal to grant planning permission for a 700,000 sq ft data centre in Buckinghamshire reaffirms the commitment of the new government to support the sector.
Access to energy will remain a key concern for investors and developers alike, with grid connections remaining a focus as part of all site selection processes. At the same time, some operators are exploring innovative strategies such as small modular nuclear reactors (SMR) and high-capacity batteries to achieve energy independence and resilience.
Andrew Saunders
Equity research, real estate, Shore Capital
With 2024 initially promising much for REITs, the year ultimately ended on a softer note for equity valuations, notwithstanding the broader underlying progress achieved within many businesses. This presents a strong value opportunity for investors in 2025, as in many ways, the same dynamics continue to remain relevant, albeit with certain tweaks.
While the economic outlook is likely to be more subdued in 2025 than previously thought, and the downward trajectory for interest rates now looks both longer and shallower, the direction of travel is still ultimately down. With one and possibly two, further rate cuts expected in the coming year, the prospects for both property yields and debt refinancing costs look more encouraging than a year ago. Occupier markets also remain in good health with demand remaining healthy, particularly in sectors such as industrial & logistics and residential, further underpinning rental growth.
Retail also looks set fair helped by affordable rents and low occupational cost ratios, despite the impacts on labour costs caused by rising minimum wage and employer NI costs.
The investor market for assets should also see an improvement in 2025, with transactions likely to be buoyed by stabilising yields and rising valuations, lower costs of debt capital and more institutional investors returning to the market. We also expect consolidation to remain a pertinent theme in 2025. With investors seeking to generate more value from corporate mash-ups capable of delivering ever-greater scale, better liquidity and operational gearing, 2025 could well be the year that provides the biggest deals yet – a Landsec/British Land merger possibly?
Following a December mark-down, REITs look to offer excellent investor value and with many offering dividend yields of 8% or more while trading at discounts of between 10% to 50% of net tangible assets and in our minds the sector looks well placed for investors targeting income and growth.
Nathan Spencer
Managing director, UKREiiF
Inflation, interest rates and planning delays are unlikely to be resolved by 2025, but with stability and reforms in planning, pensions and devolution, the groundwork for progress can be laid. Angela Rayner is signalling readiness to boost market confidence. Her interventions in projects like an 8,400-home garden village, data centres, a super-prison and the M&S Oxford Street rebuild reflect a clear aim: let’s get building. This proactive stance will attract domestic and international investors.
However, these projects are already advanced – can government reforms truly accelerate broader development? My fear for 2025 is key targets such as building 1.5 million homes, unlocking clean power investment through GB Energy and driving growth via the National Infrastructure and Service Transformation Authority remain political soundbites. But if the government embeds essential reforms, 2025 could set the foundations for sustainable economic growth in the years ahead.
Harvey Soning
Chairman, James Andrew International
With President Trump in the White House, will we see peace in Ukraine and the Middle East and trade wars between the US, Europe and China?
The problem with imposing tariffs on imports in a country dependent on these goods is that it is inflationary. Will the new president allow the dollar to devalue rather than increase interest rates, making US exports more cost effective or will he increase interest rates to control inflation making the dollar more valuable?
The latter would give US funds buying power in UK markets. High net worth citizens may seek to relocate to the UK driving values in residential markets. With the US office market seemingly in uncontrolled decline, investment funds may seek to buy prime London assets. This should see investment levels in the City exceed the historically low transaction rates of 2024. At least the UK, unlike Europe, has a stable five years ahead with a new government in place.
We see office rents for new and refurbished grade A space reaching £100 per sq ft as supply contracts. This should lead to more speculative development schemes as values start to make sense again. West End Grade A rents are already well in excess of £100 per sq ft and will also continue to rise towards £150 and £175.
There is still life in the high street. Things would have been better had the UK chancellor taken on the online retailers forcing them to pay corporation tax on UK sales. Still, we see visitors returning and new businesses opening, which is a good sign.
However, for occupiers, there are cost increases coming including additional employers’ NI, not just for them but also passed on in the supply chain. This has to be inflationary and with inflation set to rise, interest rates will at best stand still and at worst climb half a point by September before a cut by 2026.
Richard Kauntze
Chief executive, British Council for Offices
There will be an ever-increased focus on designing for the end user, who must be treated like a customer if their loyalty to the office is to be earned. The BCO’s recent report, Towards Experience Utopia, is the ultimate guide to satisfying their wants and needs. From occupier experience to energy performance, the BCO will continue to offer a forum for knowledge sharing, to help the industry respond to the challenges ahead. In 2025, we will publish new research exploring key trends around ESG and viability in the regions.
As the industry gathers at this year’s BCO Conference in Milan, we will have the chance to learn from Italy’s design powerhouse and bring fresh perspectives back to the UK. I’ve said it before, but it bears repeating – the office isn’t just a workplace; it’s a driver of brand identity, community, and culture. By leveraging collaboration, rewarding sustainable practices, and delivering outstanding experiences, the office sector will continue to create value for businesses and communities across the UK.
Paul Rickard
Managing director, Pocket Living
Despite the recent and welcome changes to the planning system, with the promise of more to come in the Planning and Infrastructure Bill, and the recent ministerial support for the SME housebuilding sector, we expect the situation in 2025 to remain challenging, at least in the near term. This is due to a combination of broader economic factors and the time taken for any policy changes to be implemented and take effect.
We need to see greater opportunities for SME developers through the release of public land with a prioritisation for local SMEs, and increased, targeted government support and flexibilities for the sector. So, for at least the first half of 2025 we expect that starts on site will remain subdued, along with wider market activity, due to ongoing viability challenges and weaker buyer confidence linked to the economy. Looking beyond that we can start to see a more positive outlook for housebuilding, but only if the commitment to policy reform and sectoral support remains.
Lesha Chetty
Director for local government and communities, Mace Consult
The government, through deputy leader Angela Rayner, is laser focused on delivering against its promises on housing construction, sending a clear message to local governments that they must meet mandatory housing targets. Local authorities are already feeling the pressure of these targets and, against a backdrop of historic local government underfunding, as well as uncertainty over restructuring initiatives, councils face a tough start to 2025.
It is therefore critical that local governments assess their organisations to put project delivery at the forefront, building capacity and capability by learning lessons from the private sector to benefit public sector programmes. Without the right team structures, relationships and partnerships in place, authorities will struggle to keep up with government targets and planning ambitions.
With major housing developments taking a decade or longer to complete, setting strong foundations now will result in a greater ability to deliver throughout the programme lifespan.
Neil Seager
Managing partner, Haslams Surveyors
In 2024, the market experienced a stop-start pattern due to the significant impact of political events throughout the year. Consequently, market activity was compressed into a shorter timeframe, with most transactions occurring in the latter half of Q3 and Q4.
The imminent completion of Station Hill in Reading, along with notable lettings to Pepsi Co, PwC, and Newflex, has provided a rare positive highlight in an otherwise challenging office market. The sector, which remains over supplied, continues to face issues related to flexible working, employer National Insurance increases and changes to employment rules. These challenges are expected to persist, alongside a shift towards super prime locations and a reduction in occupier space requirements. This trend will likely stimulate parts of the letting market as tenants streamline their portfolios.
In the industrial sector, the Thames Valley has yet to see the rental growth experienced by other regions, as new developments have been slow to emerge. This is expected to change in 2025, with several projects set to begin and complete. However, occupiers will still face limited options due to the ongoing supply shortage.
Jim Baxter
Director, Allanwater Homes
The government’s target of 1.5 million homes is ambitious but achievable, translating to 300,000 homes annually. In Scotland, this means delivering 123,000 homes over five years, which boils down to 24,600 per year. In 2022, Scotland managed to build over 23,000 homes, so this goal isn’t unachievable, but the industry needs to be equipped with the right tools from the government in order to do this. To get there, the government would need to reinstate mandatory housing targets and drastically reform the planning process. The process would be assisted if they supported infrastructure like roads, services and even public transport. Additionally, incentives for first-time buyers, such as stamp duty relief or targeted financial assistance would all go a long way to achieving this goal.
Jane Sartin
Executive director, Flexible Space Association
Experiential spaces have become increasingly popular and flexible workspaces are now offer everything from gyms and yoga studios to basement bars, indoor golf driving ranges and even dedicated podcast studios. 2025 is expected to be the year of experiential spaces with these facilities luring people into the office during a time when working from home has become more prevalent. While functional workspaces that simply provide a place to work alone or with others in a business environment will always have a place, the market is growing and there is an increasing appetite for new and exciting facilities.
Kush Rawal
Executive director of customer services, Metropolitan Thames Valley Housing
Social housing is a microcosm of our wider society, and often we work with people experiencing acute challenges impacting the quality of their day-to-day lives. The cost of living crisis and factors such as health and educational inequalities, financial and food insecurity are some of the issues that impact our residents. The funding pressures faced by public sector bodies and charities continue to create support gaps, which housing providers have filled even when these extend beyond our traditional areas of focus. It is important that social housing providers support where appropriate, but we can’t do this alone or without adequate financial support.
Turning specifically to care and support, recruitment remains a considerable challenge. There’s already a 20% vacancy across the sector and the recent employer’s national insurance increase will put further pressure on the viability of services. Despite this, we cannot lose sight of the fact that we have a collective social responsibility to the most vulnerable in our society. Ensuring care and support commissioners are adequately funded will be vital to ensuring these services remain operational. In 2025, I’d like to see greater funding given to care and support commissioners to enable them to support these important services.
Matthew Pateman
Managing partner, Workman
Culture and values are the ultimate backbone of a successful workplace, shaping how employees interact, make decisions and approach challenges. In the property industry – a sector built on trust, relationships, and client satisfaction – these elements are especially critical, and a priority for Workman as we move into 2025 and beyond. Our culture and values directly impact recruitment, employee engagement, retention and productivity, attracting top talent and motivating teams to deliver exceptional service, which translates to long-term business success.
A strong workplace culture fosters collaboration, innovation and alignment with our goals; all vital for navigating the competitive and often complex property market. Core values provide a moral compass, ensuring consistency in our actions and decisions, which builds our credibility with clients and stakeholders. We’re currently engaging with all our people across the firm, using their feedback to inform the kind of workplace we want to be. In an industry where trust and much-valued client relationships are paramount, businesses that invest in culture gain a competitive edge, driving both financial and reputational growth.
Crystal Carter
Workspace development manager, Dock
In 2025, I predict that sector-specific workspaces will rise. These ‘innovation hubs’ can be a great platform for sector support, networking, and collaborative working – all of which can increase the survival rate for small businesses. In Leicester, for example, we’re trialling this approach of fostering business ecosystems at purpose-built workspaces like Dock (with tech and innovation SMEs bordering on Space City’s Enterprise Zone) and the LCB Depot (creating a dedicated space for creatives in the city’s Cultural Quarter).
You can’t underestimate the power and potential of communities built here. With the circular economy in the spotlight, businesses will also be more willing to take something old, damaged or unfit for purpose and revitalise it, even if that requires more resources. Regenerating local communities, fostering sustainable economic growth, and turning around contaminated sites will be another way companies show their commitment to CSR/ESG initiatives next year.
Adrian Watts
Chief executive, Croudace Homes
We have suffered in the past from nimbyism across the country, which has held back housing delivery. Given the stark change to a pro-housing government, it will take some time for Labour to implement significant changes. While the noise so far has been positive, I expect limited progress to be made this year, as the delivery of these changes will not happen overnight.
The proposed changes to the National Planning Policy Framework (NPPF) will help, but without sufficient resources and recruitment within Local Planning Authorities, progress will be too slow to dramatically shift the outlook of these departments. We also need Registered Social Landlords to be in a strong position to contract on S106 housing if delivery is to first be maintained and then increased alongside the rise in housing demand. Finally, with no support for first-time buyers, we will struggle to increase our housing stock and risk leaving a generation behind, stuck in the vicious cycle of renting.
Neil Carlyle
Managing director, Caro Developments
I’m expecting a cautious outlook, with the market sitting on its hands and watching our own government’s stewardship of the economy while taking into account world events. Both point to a slowing down of economic output. If we’re to avoid this, then we need the government to match its own claims for facilitating economic growth, but I do wonder how they will influence supply side issues such as skills, labour shortages and supply chain disruption, all of which play into costs and viability.
The market will keep going and will find a way to make a buck, but I don’t see any momentum or flowering of confidence. A stable policy environment which feeds into lower interest rates and falling inflation could change all that, of course.
Richard Merryweather
Joint head of UK investment, Savills
After a challenging 2024, the tide is turning and the nascent recovery in the UK real estate market should gather momentum in 2025. While we expect the logistics and living sectors to continue to be popular items on most investors’ shopping lists, core offices are drawing interest from both private investors and insurance companies alike. US private equity players and UK institutions are back in London, and the pool of investors looking further into the regions continues to grow.
Clear signs of rental growth in retail warehousing and rebased rents in the high streets are also attracting a broader range of investors either as a means of capturing attractive pricing readjustment and/or to diversify exposure to other sectors. We are certainly more optimistic about the prospects for next year than we were 12 months ago.
Dan Mason
Managing director, Multi-Realm
We’re going into 2025 optimistic and looking forward to the year ahead. There is much more positivity in the investment market, with an acknowledgement that retail is once again an attractive investment class, particularly where rents and values have rebased. We are now seeing the opportunity for some rental growth and importantly, we have seen some banks and lenders re-entering the market increasing the availability of debt.
Assuming consumer confidence is maintained, and with retailer leasing activity also on the rise, these are strong indicators that the optimism will continue. Of course, there are cost pressures facing retailers, and therefore brands want to partner with operators and landlords who are data rich and have the tools and practices in place to help the navigate these headwinds and maximise sales. We’re particularly excited about our opening of the Cotswolds Designer Outlet, the only major retail/outlet destination planned to open in 2025.
Darren Gardner
COO, Nido Living
We anticipate a further rise in international student numbers across Europe in 2025, alongside a recovery in the UK following a period of uncertainty and instability. Students and their parents will remain focused on accommodation where they perceive there to be value for money alongside health and wellbeing attributes, community and social connectivity and, of course, security and quality.
In the UK, we believe there is still a need for greater awareness and understanding of purpose-built student accommodation (PBSA) within planning and development frameworks. We hope the new government will address this, as the balanced development of all living sectors is critical to market stability. Across Europe, we expect to see growing demand for flexible living solutions, where students seek a blend of lifestyle and work environments with flexible tenures and more hospitality-led services. With this in mind, we are excited to continue our expansion across Europe and explore new markets such as Germany and Italy.
Will Kinnear
Founder, HEWN
The overall flex sector will continue to grow in 2025, but what I think we will particularly see is the growth in managed product. We have already seen more operators entering this sector of the market in the last year. Managed spaces provide occupiers a fully maintained workspace under one all-inclusive monthly or quarterly fee. It is increasingly becoming popular with corporate occupiers, who want a bespoke offer but more flexible terms – the latter being increasingly important with the economic turbulence we have seen of late.
I suspect we will also see operators lean further into hospitality as a differentiator in the market. Businesses using flex space are demanding more from their operator, it’s not just interior design they are after, it is a cultural and social offer. Flex is not just a nice to have in a portfolio, it is becoming a need to have strategically. Property owners are realising this, as adding flex enables traditional leaseholders to flex in and out dependent on need, as well as opening their assets to all marketing channels, meaning that property owners can attract a great customer base.
Rosie Oliver
Studio director, Gensler
Optimism is growing in real estate, with easing inflation and falling interest rates boosting investor confidence. Clients are eager to reimagine spaces, seeking creativity and purpose. Today’s end users expect more and are demanding functional, amenity-rich spaces focused on wellness, inclusivity and sustainability. The challenge is doing more with less: more innovation and flexibility, with fewer resources, costs, and environmental impact. As people gain more control over how and where they work, live and play, the focus will be on creating engaging, sustainable environments that meet evolving needs and values.
James Dickens
Managing director, Wavensmere Homes
We completed 96 houses and 380 apartments in 2024, equating to a value of £105m. This is similar to the completion numbers for 2023. Because of unforeseen pre-construction delays, completions will fall to 347 for 2025, before rising significantly in 2026 and beyond. Going forwards with the five major sites that we have recently started – or will shortly break ground at – there will be a greater proportion of city centre family homes. Our £150m Wolverhampton Canalside South project will also feature a building of 10 co-living units – each containing six bedrooms, providing an affordable purpose-built housing typology for graduates.
We admire the Cabinet for shooting for the stars and implementing measures that should help increase housing delivery over time. However, for major regeneration sites that require complex land remediation and significant up-front infrastructure investment, it can take two to three years before the first home completion.
Ben Roberts
CMO & co-founder, Utopi
2025 promises to be another big year for the sector. I think some of the key themes we will see across the purpose-built student accommodation (PBSA) in particular are resident experience and AI and data.
I think we will see more of a shift of focus to student experience as competition for resident satisfaction continues to push operators to offer the best accommodation and services. This will lead to more collaborations in proptech solutions, more innovation in the resident app space and more time and energy spent on gamifying resident interactions – not just from a sustainability standpoint either, with the sector hugely focused on resident wellbeing.
I also think we will see more investment in AI, ensuring that it is more than a buzz word and becomes a real driver for efficiency, compliance and centralised operations. Reliable data collection and structures are the key foundation to this, so I think companies will be getting themselves organised for the transition.
Chris Wright
Director, head of sustainability & decarbonisation, Avison Young
Last year was a landmark year for the energy transition. With Labour lifting the ban on onshore wind development and introducing the Great British Energy Bill, we can expect accelerated renewable energy projects. The UK’s renewable generation, now more than 42%, will see further growth, especially in wind energy. Meanwhile, the UK became the first G7 nation to fully phase out coal power, marking a significant milestone in decarbonisation. Looking ahead, grid connection reform will be critical in addressing bottlenecks and enabling the UK to achieve its ambitious renewable energy targets, including 50 GW of offshore wind by 2030. Investments in battery storage, EV charging infrastructure and low-carbon heating solutions will enhance energy resilience and support electrification. Additionally, expanded flexible demand programmes will reward consumers for smarter energy use. With strong policy support, technological advancements and private investment, 2025 is poised to be transformative for decarbonisation. However, progress will hinge on ensuring infrastructure keeps pace, particularly through grid reform.
Yasmin Al-Ani Spence
Director, WilkinsonEyre
Over 2025, we expect the appetite for low-carbon offices to continue to grow, with demand outstripping supply, enabling developers to achieve green premium rents and become more attractive to investors. Choosing a retrofit-first approach for aging commercial towers, such as Citi Tower in Canary Wharf, has enabled us to set a benchmark for tall buildings and prevent stranded assets.
Whereas in the past, demolition and redevelopment was a widespread practice, we are now seeing a much-needed shift towards existing buildings coming up for reuse. Quite remarkably, more than half of London’s commercial buildings are retrofitted (53%), which boosts hopes that architects and companies will be embracing circularity, longevity and sustainable initiatives this year.
Just how good is the biggest transfer deal of the summer?