Whichever party is
in office when the political deadlock over Brexit is finally broken, the
construction industry stands to benefit from a re-bound in new private business
investment, particularly in new commercial and industrial building.
Whilst the economy
has so far avoided recession, business investment fell again in the second
quarter of this year - for the fifth time in the past six quarters - when it
was 1.4% down on the period a year ago, according to the Office of National
Statistics.
But as the
uncertainty which has held back companies’ investment eventually passes, so
prospects will brighten for new construction orders in the private commercial
and industrial sectors.
And despite the
political climate, Glenigan Construction data provides some encouraging signs
that new construction projects are being given the go-ahead, particularly in
the regional office building and industrial/logistics sectors.
The latest Glenigan
Construction Review shows that although there is a scarcity of major office
projects, the value of project starts for smaller office buildings in the
£20-50 million range rose 28% to £288 million in the three months to September,
compared to the period a year ago.
New office building
construction has been gathering pace in the more resilient regions notably the
East of England, where office starts were worth £113 million in the three
months to September. Typical of the sort of scheme getting underway is
Brookgate’s £19.9 million office project with a retail unit in Cambridge, where
work started in early September and Wates Construction is the main contractor
(Glenigan Project ID: 17256441).
Meanwhile in the
East Midlands, planning approvals for new offices in the third quarter were the
second highest outside London, at £71 million, whilst fit out work on
government office projects is also generating construction activity across the
region.
Work is due to start
in the new year on a £10 million office fit out to house the Passport Office at
Fletton Quays in Peterborough (Glenigan Project ID: 19357691). Moving west
across the Midlands, a £5 million fit-out at Platform 21 at Stephenson House in
Birmingham will create a new government hub for 1,700 staff (Glenigan Project
ID 19357691.) Both schemes are at the pre-tender stage.
Prospects for new
office construction in Manchester are also brightening. A recent report from
Savills says the city saw the highest take-up of office space on record in the
first half of this year – around 806,000 sq ft - whilst available office supply
has continued to fall.
One project which
will meet growing demand for commercial space in Manchester where Glenigan
Construction data shows detailed plans have recently been submitted, is the
£15.33 million Mayfield Quarter Phase One office and park scheme. The project
is at the pre-tender stage with work set to start in the spring (Glenigan
Project ID 19127968).
Brexit uncertainty
has held back activity in the industrial building sector but sentiment at
Segro, the largest developer in the sector shows little sign of flagging. It
says it is continuing to benefit from the structural trends towards
urbanisation and the tech revolution and is heading into the final part of the
year with confidence.
Today, Segro has
some 644,000 sq m of space under construction and is on course to invest £600
million in its development pipeline in 2019. Recent acquisitions at the group
include eight acres of land in Tottenham in north London, where it plans to
build 19,000 sq m of urban warehousing.
One major industrial
scheme where Segro – along with Roxhill Development – has recently submitted
detailed plans is for a £95.5 million project in Newport Pagnell involving two
storage & distribution units. Construction work, which is at the pre-tender
stage, is due to start next spring and continue for 15 months (Glenigan Project
ID: 18258018).
