Regional city development remains broadly resilient despite challenging year has been saved
Regional city development remains broadly resilient despite challenging year
01 February 2021
- Whilst recorded new starts are lower, the delivery of new employment floorspace, residential properties, student accommodation and hotel beds have all increased across the four cities compared to 2019;
- Construction activity in Belfast underpinned by sustained investment in Grade A office development, with 1.3 million sq ft of new office space under development or completed in 2020;
- Development activity in Birmingham remained positive, with 34 schemes under construction and residential development the most active sector;
- Second highest quantum of office space delivered in the history of the Leeds crane survey, exceeded only by 2016, alongside sustained activity in the residential sector;
- Overall development levels were resilient in Manchester, with the residential sector remaining especially buoyant.
Belfast, Birmingham, Leeds and Manchester have defied market challenges after delivering nearly 2.5 million sq ft of office space in 2020, a rise of over 547,000 sq ft more than 2019, according to Deloitte’s Regional Crane Survey.
The Crane Survey, which monitors construction activity across a range of sectors including offices, residential, hotels, retail, education and student housing, shows that a further 3.61 million sq ft of office space is currently under construction across the quartet of cities. Residential delivery increased nearly 67%, rising by 3,290 to 8,197 new homes completed in 2020. A further 18,912 residential properties are currently under development in the four cities.
The cities have delivered 5,405 student bed spaces in city centres, with a further 3,485 in development as universities and private student accommodation providers continue to invest in both teaching accommodation and student housing.
Simon Bedford, partner and regional head at Deloitte Real Estate, commented: “Regional office construction was strong in 2020, despite some delays in construction caused by lockdowns. The office pipeline has softened somewhat, as developers take a ‘wait and see’ approach to future demand.”
Deloitte’s research indicates the shift to home-working could change how businesses use office space in the future, which, in turn, could influence how local residential areas are used. This could potentially shape the role of neighbourhood set-ups to create more diversity within local centres.
Bedford said: “Our latest CFO survey showed that home-working is predicted to increase five-fold by 2025. The role of the office could flex to meet shifting demands for collaborative and creative space, as organisations revaluate their needs.
“Looking at residential, there’s a major focus for new developments to provide outdoor space and community facilities. This reflects a growing trend towards small-scale retail and leisure offerings as part of wider mixed-use developments, helping to create neighbourhoods and foster a sense of community. In turn, this could have a positive knock-on effect for the high street. For example, our future of the high street research suggests an increased focus on localism and a greater level of commitment to small independent businesses that can easily identify the origin of their goods. Therefore, all things considered, 2020 will be one of the stronger years in overall terms and points towards the ongoing renaissance of our major UK cities.”
Daniel Barlow, managing partner for regional markets at Deloitte, added: “There are real signs of recovery and resilience across the UK, and it’s incumbent on us all to maintain momentum to ensure that all cities, towns and villages level up.”
Key regional highlights
- 23 major schemes under construction or completed in 2020, down from 26 projects in 2019;
- There were seven new projects breaking ground in 2020, down from 11 starts in 2019;
- Construction activity was underpinned by sustained investment in Grade A office development, with 1.3 million sq ft of new and refurbished office space under development or completed, an increase of over 300,000 sq ft on the previous year. Two-thirds of the new office space remains available to let;
- Residential development saw no new residential starts in 2020, and 42 units under construction;
- At year-end 2020, 175,000 sq ft of retail space was under construction, compared to 34,000 sq ft in 2019;
- As in the previous year, 2020 saw no new hotel developments, following a surge in completions during 2016 to 2018;
- There was one major new student accommodation start in 2020, and one major completion of a 430-unit student development in the city.
- 2020 saw 34 schemes under construction, down from 41 in 2019;
- Record highs were observed for residential development, with 2,072 units completed, well above the 10-year average of 607 and the highest total in the past decade;
- Twenty residential schemes are currently under construction, including four new starts;
- The city also recorded the highest figure for student accommodation with 1,458 beds completed in history of the Birmingham Crane Survey;
- The amount of office space under construction fell for the fifth consecutive year, with completion of just over 210,000 sq ft in 2020 - similar to the levels seen in 2016 and below the 10-year average. However, this does follow a landmark year in office completions in 2019, when over 775,000 sq ft of new and substantially refurbished office space was delivered;
- Pre-letting of offices remains strong with 51% of space currently under construction pre-let;
- There were no major new schemes started in retail, for the second consecutive year.
- Leeds saw 12 overall new starts in 2020, a similar level to 2019;
- Following three years of above average delivery in the office sector (average annual construction since 2006 is 315,787 sq ft), 667,059 sq ft of office floorspace was delivered in 2020. This is the second highest quantum in the history of the Leeds Crane Survey, exceeded only by 2016 (700,000 sq ft);
- There was sustained activity in the residential sector, with four new residential developments commencing construction in 2020 which will deliver 731 new homes, up from three new starts in 2018, and consistent with the four reported in 2019. There were 12 residential schemes under construction in 2020 in total;
- Three of the four new start residential developments are for the Build to Rent (BTR) market, and 69% of all new homes under construction are for BTR. This reflects the need to improve the quality of rental stock in city centres in order to cater for demand generated by young professionals;
- The survey reports a slowing of construction in student accommodation with one new start and no new starts in retail/leisure, education or healthcare. Development around the Corn Exchange has started the delivery of new public spaces in the city;
- Overall development levels are resilient, with the residential sector being especially buoyant;
- Across all sectors, 35 schemes completed in 2020, up from 27 in 2019, reflecting the high levels of new starts in recent years. 24 schemes started on-site during 2020;
- The delivery of new homes in 2020 is the highest on record (4,914), yet the number of properties under construction remains above 12,000 for the third consecutive year;
- The amount of office floorspace under construction fell to 1.29m sq ft at the end of 2020, compared to 2.1m sq ft in 2019, as 2020 saw the largest amount of office floorspace delivered since 2008 (1.2m sq ft);
- Just over one-third (36%) of all office space under construction is pre-let and the pipeline for availability of further office space requires new approved developments to commence;
- Hotel beds under construction at the end of 2020 fell for the first time since 2015, but the overall pipeline is still double the average since 2007 (994 beds) at 2,397 beds under construction;
Notes 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 Office Crane Survey and has data going back to 1996.
Published 2nd February 2021 are Belfast (first published 2017); Birmingham (first published 2002); Leeds (first published 2006); and Manchester (first published 1999).
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
Hotels: +35 beds
Retail and leisure: +10,000 sq ft
Residential: +25 units
Education: +10,000 sq ft
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 2020.
Top line data as follows:
Number of new starts in 2019 by sector
Number of new starts in 2020 by sector
Office - Volume of space under construction per survey (sq ft)
|2018||2019||2020||% change||Completions (2020)|
Total office space delivered in 2019 across the four cities = 1,925,373 sq ft.
Total office space delivered in 2020 across the four cities = 2,472,753 sq ft.
Residential - volume of space under construction per survey (no. of units)
|2018||2019||2020||% change||Completion (2019)||Completion (2020)|
Student Housing - volume of space under construction per survey (no. of bedspaces)
|2018||2019||2020||% change||Completions (2019)||Completions (2020)|
Hotels - volume of space under construction per survey (no. of beds)
||% change||Completions (2019)||Completions (2020)|
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The information contained in this press release is correct at the time of going to press.
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