Record highs in construction activity

Richard Furlong - City Surveys Group

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Published: 8th February 2017

This Article was Written by: Richard Furlong - City Surveys Group


The latest report of the Deloitte Real Estate Crane Survey saw UK regional cities break resurgence and development records – some for the first time in 15 years.

The survey, which monitors construction activity in Birmingham, Manchester, Leeds and Belfast has reported a significant rise in city-centre developments on a scale that surpasses pre-recession peaks.

The uplift in activity is believed to be linked to the ongoing development of new transport links, along with a rise in popularity of city centre living. Massive projects such as Manchester Airport’s T2 overhaul and HS2 are thought to be instrumental in this crane renaissance.

However, despite the survey predicting that political and economic uncertainty could dampen investment in the coming years, there is optimism on a local level.

Local government development partner, Simon Bedford, said: “The weakening of sterling and boost of international connectivity via Manchester Airport is also set to provide a fertile environment for potential investors.”

The types of developments ongoing cover a broad spectrum: offices, flats, hotels, shops, education and student housing make up over 70 new starter projects across the four major cities.

There are 39 new projects under construction in Manchester alone, up 18 from the previous survey and significantly higher than the standing record set in 2007.

Towering over all other projects, however, Deloitte found a record 6,963 residential units to be currently under construction in Manchester, compared with less than half that at the start of 2016.

Manchester City Centre leads the way for the residential boom, with a total of 22 projects breaking ground last year. The previous high of 14 was set almost a decade ago in 2008!

Four of these projects, all now under construction, are to be more than 25 storeys high. They will change the city skyline forever and break new records with the Owen Street skyscraper soon to clinch the title of the UK’s tallest residential tower.

Birmingham and Leeds have also seen a significant increase in activity with a huge rise in residential schemes starting construction last year, totalling 2,919 units between the cities.

Retail led the way in Leeds, however, as the delivery of new shopping areas doubled that of the average annual total, with nearly 600,000 sq ft of additional space constructed in 2016.

The crane survey also identified a trend for major refurbishment of office space. Of the would-be new starts, nine are dedicated office space projects, with all but one being refurbishments.

Bedford said: “The increase in office refurbishment projects comes as developers and landlords maximise the value of their assets in light of a rapidly expanding business community.

“Twelve per cent of this floorspace is pre-let, and we expect strong occupier demand to continue throughout 2017.”

Birmingham broke the record with 1.4 million sq ft of new office space currently under construction; a 50% increase on last year and the highest rate since the report was first published in 2002.

The survey suggests that 2017 will also see the largest delivery of hotel rooms in over a decade.

The hotel sector is enjoying major expansion with Manchester planning to create 1,040 new hotel rooms. Leeds has 385 rooms in the development pipeline but Belfast tops the pile with six new hotel projects currently under construction, set to deliver more than 1,000 new hotel rooms.

The Belfast Crane Survey further recorded 19 schemes currently under construction in the city, including four educational facilities, seven student accommodation projects, six office developments and eight hotels. Despite this, there are no residential units set to come to the market this year – with only 84 units completed in the city centre in 2016.

Bedford said: “The results of our four crane surveys reflect the growth and resurgence in the regions, breaking records set more than a decade ago.

“All sectors are active and we conclude that our regional cities are delivering growth and investment at levels not witnessed for many years.”

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