Construction activity at record high as UK delivers city-centre homes and offices has been saved
Construction activity at record high as UK delivers city-centre homes and offices
5 February 2019
Confidence among developers is strong across the UK’s regional cities as Deloitte’s latest crane surveys find that construction activity has hit record levels.
The Deloitte Real Estate Crane Survey series monitor construction activity in Belfast, Birmingham, Leeds and Manchester as well as Dublin. In 2018 each city saw a sustained or increased level of development across a range of sectors including offices, residential, hotels, retail, education and student housing.
Commenting on the surveys’ findings, Simon Bedford, partner and regional head at Deloitte Real Estate, said: “To have construction figures this healthy is somewhat of a surprise given a myriad of market uncertainties. Developer confidence is a key indicator for economic health and to have this many significant construction starts over the last 12 months, especially in speculative office schemes, is testament to the resilience of the regions and appetite for growth.”
Exploring key cities, the crane surveys monitor construction activity in:
Belfast: The Northern Irish capital has 34 schemes under construction in the city centre – with 21 schemes completed in 2018 and nine set for completion this year. It has been a healthy year for office development as work began on over 400,000 sq ft of new Grade A space, which the survey notes as making good progress against the Belfast Agenda target of 1.5 million sq ft of new space by 2021.
Birmingham: The West Midlands city saw 23 new starts, with residential taking the lions share. Thirteen new schemes commenced, bringing the development pipeline to over 5,000 units under construction. Last year also saw the delivery of the most residential units to the city centre, the highest since the Birmingham crane surveys started in 2002. New office development is down from a peak of seven new starts in 2016, to just two new schemes today. However, total office volume under construction remains high at 1.4 million sq ft and 2019 is set to be a record-breaking year for office completions.
Leeds: Leeds has recorded the highest level of construction in the city centre since the Leeds crane survey began in 2002, with 21 new construction starts in 2018. This includes seven new office schemes adding to the record 844,986 sq ft office development pipeline. Residential development continued an upward trajectory with three new starts, set to deliver a further 533 units to the city, bringing the total to 2,119 units currently under construction. Worth noting is that five of the developments under construction are ‘Build-to-Rent’, which will be the city’s first purpose built Build-to-Rent units.
Manchester: Heading to the North West, it is the residential sector driving the record levels of development activity. A total of 14,480 residential units are under construction - double that of two years ago. Last year, 2,569 units were delivered to market - the highest level in 12 years and Manchester’s development pipeline suggests 2020 as delivering the most homes in nearly 20 years.
Manchester’s office sector has over two million sq ft of office space under construction across 13 schemes; a remarkable increase on the consistent levels of 1.5 million sq ft reported between 2015 and 2017. North West occupiers have been busy as a quarter of office developments in 2018 were pre-let.
Bedford commented: “If Manchester had featured in the recently published North American Crane Index, it would have ranked number two - behind Toronto but in front of Seattle, Los Angeles and Chicago. That might have seemed like a remarkable stat a few years ago given Manchester only had one crane in the sky in 2011, but today the figure is a massive 78 sites under construction.
“The marked increase in office construction levels is reflective of the continued draw to all these regional cities for major businesses. Investor confidence is thriving, as the rise in office pre-let deals clearly demonstrates. With creative, media and tech occupiers leading some of the major office deals in 2018, twinned with growing diversity in talent, these are good foundations for regional growth in the years to come.”
However, looking ahead, Bedford concluded: “Despite record levels now, challenges may arise as we enter the 2020s. Each of our featured cities have ambitious plans which, if they are to emerge, will need to be supported by investment in essential infrastructure which is currently struggling to keep up with the pace of real estate development. The next decade may well be all about transport and smarter city solutions.”
Note to editors
About the Deloitte Real Estate Crane Surveys:
A crane survey is the definitive review of construction in a city region and is seen as a barometer of developer sentiment and future supply. Deloitte Real Estate also publishes the London crane survey and has data going back to 1996.
Published 5th February 2019 are:
- Belfast (first published 2017);
- Birmingham (first published 2002);
- Leeds (first published 2006); and
- Manchester (first published 1999).
Published 6th February 2019:
- Dublin (first published 2018) – report available on request.
Each report measures the volume of development taking place across that city centre and its impact. Property types include office, retail, leisure, residential, student accommodation, education and hotels. The reports include insight from developers building new schemes or undertaking significant refurbishment of the following: (Size minimum)
- Office -10,000 sq ft
- Retail – 10,000 sq ft
- Residential – 25 units
- Education, leisure and hotel schemes – significant scheme for inclusion.
The reports are compiled by Deloitte’s in-house real estate teams who have monitored construction across the cities. Deloitte’s field research is then verified with direct industry links and in-house property experts. The data capture period for these crane surveys may differ from region to region, but generally covers the 12 months of 2018. Top line data as follows:
The North American Crane Index, published by Rider Levett Bucknall in January 2019.
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.
Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.
Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
For more information, please visit www.deloitte.co.uk
Member of Deloitte Touche Tohmatsu Limited