The era of the office block as the dominant force in British commercial development may be drawing to a close.
For the first time on record, the combined value of data centres receiving detailed planning permission in the United Kingdom has surpassed that of office developments, marking a significant shift in the country’s built environment.
Figures compiled by construction analytics firm Glenigan reveal that data centres granted detailed planning permission in 2025 were valued at nearly £9 billion, representing a 58 per cent increase on the previous year. By contrast, the value of office schemes receiving permission fell sharply, dropping 40 per cent to £6.4 billion.
The reversal reflects the extraordinary appetite for digital infrastructure being driven by artificial intelligence and cloud computing. American technology giants, having initially concentrated their expansion efforts domestically, have increasingly turned their attention to international markets, with the UK emerging as a key beneficiary.
Yuliana Ivanykovych, senior economist at Glenigan, noted that the UK had been somewhat slower than the United States to respond to the AI-driven surge in demand, largely because the impetus originated with American firms focused on their home market. That dynamic, however, has shifted markedly since 2024, with a sharp rise in approvals following the pivot towards overseas expansion.
Data centres, essentially vast warehouse-like facilities housing the physical infrastructure that underpins cloud services and artificial intelligence, are expected to require dramatically more power in the years ahead. Oxford Economics, the consultancy, estimates that the sector’s electricity footprint could increase more than fivefold by the end of the decade, underscoring the sheer scale of anticipated growth.
Nick Green, planning director at property consultancy Savills, pointed to the enduring nature of the demand as a key factor in attracting investment. The structural growth in AI and cloud computing, he suggested, gives investors confidence that this is not a passing trend but a long-term proposition.
Yet the proliferation of energy-intensive data centres has not been without controversy. Campaigners have raised concerns about the facilities’ considerable power requirements at a time when the UK is grappling with its energy transition and grid capacity constraints.
The challenges facing the office sector, meanwhile, are well documented. Rising construction costs, stubbornly elevated interest rates and persistently subdued demand in the post-pandemic landscape have combined to create a difficult environment for developers. Grant Lonsdale, senior director of market analytics at CoStar, observed that the development economics for many office schemes remain testing, prompting investors to deploy capital more selectively.
There is, however, an important caveat to the headline figures. Whilst planning permissions for data centres have surged, the value of projects actually breaking ground tells a rather different story. In 2025, the value of data centre project starts stood at just £882 million, compared with £8.5 billion for office developments, a reminder that securing permission and commencing construction remain very different propositions.
For the UK’s commercial property landscape, the message is nonetheless clear: the data centre has arrived as a serious rival to the office block, and the gap may only widen as the AI revolution gathers pace.
