Commercial construction sector finishes year strongly

Latest News Tue, Dec 18, 2018 9:47 AM

The commercial construction sector is finishing the year strongly but the near-term future is less certain as private sector developers move in different directions.

The November update from the IHS Markit construction purchasing managers’ index showed a “sustained” increase in commercial activity.

Glenigan’s construction market research has also identified a swathe of construction contracts awarded on major private sector commercial schemes.

The biggest was a £300 million deal let to Kier for the Moxon Street scheme at Marylebone in central London.

London is the focus for major commercial projects, and 40 schemes set to provide 4.2 million square foot of space completed in the last six months, according to Deloitte’s latest Crane Hire Survey for Winter 2018.

Mike Cracknell, a director at Deloitte Real Estate’s capital projects advisory team, explains: “This is the highest level of office space brought to market in over 14 years.”

Glenigan’s market analysis however shows a shift within the wider commercial sector away from offices in London.

Moxon Street will provide luxury flats, while big projects outside the capital are progressing. These include a £183 million deal to build Birmingham’s tallest residential block in Birmingham for Moda Living, the Amex House office and residential scheme in Brighton and the £235 million Meadowside residential development in Manchester.

Moda Living is the highest ranked commercial developer in Glenigan’s latest rankings of the industry’s top 100 clients.

Moda awarded £287.1 million-worth of contracts in the 12 months to November 2018 according to Glenigan’s market analysis, and is ranked in tenth place in the top 100.

The next highest developer is Derwent London after placing orders for £263.1 million-worth of projects. This includes the £260 million Soho Place development in London, which includes offices, retail space and a new theatre.

Overall, there are 18 standalone commercial, industrial and residential developers awarding work to external contractors in Glenigan’s ranking of the industry’s latest top 100 clients.

Those developers have let 136 contracts worth a total of £3 billion. This total compares to £5.2 billion in the previous year, although 2017’s total includes £1.6 billion from three contracts for the redevelopment of Battersea Power Station.

To appear in Glenigan’s top 100 ranking, companies must have let at least three contracts.

The Battersea Development Company did that and appeared but the biggest project let in the last 12 months did not as this was a one-off contract.

Sir Robert McAlpine is building the £1 billion Raffles scheme in London for a consortium of India's Hinduja Group and Spanish construction company Obrascón Huarte Lain.

Including this project swells the latest figure for commercial orders, but the overall total is still down on a year ago.

A hiatus in commercial work is emerging as changes in the sector emerge. Glenigan’s economics director Allan Wilén says: “Last year’s sharp fall in detailed planning approvals has reduced the pool of projects in the pre-construction pipeline and is forecast to dampen commercial office starts during 2019 and 2020.

“More encouragingly the recent recovery in approvals during 2018 suggests renewed confidence among investors in the longer-term prospects for the sector and is expected to lift project starts over the medium term.”

Featured News

Specification news
KINGSPAN OPTIM-R APPOINTED FOR ROYAL PAVILION

The Kingspan OPTIM-R Flooring System has been fitted as part of a landmark ...

Read More >>

Specification news
New website showcases stunning Imperial Brick Tile...

Imperial Bricks’ stunning feature-wall Brick Tiles can now be seen in their full...

Read More >>

BUILDING PRODUCT LIBRARY - LATEST BROCHURES

BUILDING PRODUCT DIRECTORY - LATEST PRODUCTS

CUPACLAD Rainscreen Cladding
CUPACLAD Rainscreen Cladding

CUPACLAD® rainscreen cladding systems offer a revolution in cladding applications for natural...

Read More >>

Natural Slate
Natural Slate

Cupa Pizarras natural slate is the product of choice for thousands of architects and roofers, and...

Read More >>

Thermoslate
Thermoslate

THERMOSLATE®, is the only solar system in the market made with natural slate that generates energy...

Read More >>

CONSTRUCTION VIDEOS - LATEST VIDEOS

Torquay Boys’ Grammar School
Torquay Boys’ Grammar School

When the school urgently needed to replace their existing wooden floor in their main hall due to...

Watch Now >>

Nailsworth Youth Club, Gloucestershire
Nailsworth Youth Club, Gloucestershire

A recent refurbishment, due to the failure of the old Victorian timber floor in the sports hall, saw...

Watch Now >>

Les Ormes Activity Centre, Jersey | Case Study | Gerflor UK
Les Ormes Activity Centre, Jersey | Case Study | Gerflor UK

The Les Ormes holiday resort in the St Brelade area of Jersey in the Channel Islands has converted...

Watch Now >>