Hopes of regional city rebound after project starts slump

Aaron Morby 5 years ago
Share

England’s big three regional cities suffered a fall in new project starts last year despite overall construction activity being held up by record levels of on-going projects.

The latest Deloitte Regional Crane Survey charts the impact on client confidence of Brexit uncertainty in Birmingham, Manchester and Leeds.

But researchers remain hopeful that last year’s fall from peak 2018 starts could still prove a blip as developer confidence returns.

Office starts fell sharply although residential schemes continued to prop up city building activity, with Leeds breaking Crane survey records for the city and Manchester holding up high levels of residential work.

 

Deloitte Crane survey key markets
2019 2018 change
Number of project starts
Manchester 23 43 -46%
Leeds 12 21 -42%
Birmingham 11 23 -52%
Office space under construction
Manchester 2.1m sq ft 2.1m sq ft <1%
Birmingham 1.1m sq ft 1.4m sq ft -21%
Leeds 290,000 sq ft 800,000 sq ft -66%
Resi units under construction
Manchester 12,357 14,480 -15%
Birmingham 5,506 5,065 9%
Leeds 2,832 2,232 27%
Student housing units under construction
Leeds 2,799 2,768 27%
Birmingham 1,857 2,667 -30%
Manchester 1,410 1,794 1%

Simon Bedford, partner and regional head at Deloitte Real Estate, said: “Regional cities continue to show huge resilience in the face of recent economic uncertainties in delivering record volumes of city centre living, offices and education.

“It’s been a record year for residential with the three English cities delivering more homes than at any time since 2007 and our development pipeline suggests this trend will continue,” he added.

“However, fewer homes have been delivered than we’ve previously anticipated driven by a lack of skilled labour, increasing costs, scarcity of development land, and developers being at capacity.

“This could present real challenges for future delivery.”

Birmingham

In Birmingham, ongoing high levels of office construction continue to bouy construction activity, but just 11 new schemes started last year, half the previous level in the last two years.

Of the new starts, seven sites were large scale residential schemes and four were offices. There were no new retail, leisure or hotel schemes started last year.

Edwin Bray Partner, Deloitte Real Estate said: “Only time will determine whether 2019 was just a blip in development activity or something more permanent however we can confidently say that the developers were not deterred and throughout the year they carried on building.”

The construction of HS2 Curzon Street would be a bellwether for resurgent growth in the years ahead as Birmingham also prepares to stage the Commonwealth Games.

Leeds

Construction activity in Leeds is down with 12 new starts against 21 in 2018, with office development down by two thirds.

But the residential sector is breaking crane survey records with 2,832 units under construction and 2,218 of these homes for the ‘build to rent’ market.

An additional 2,799 student accommodation rooms are also being built, the highest in the Leeds crane survey history.

The city has also broken crane survey records for new education and research facilities with 420,000 sq ft completing in 2019, and over 480,000 sq ft remaining under construction.

Manchester

This North West city’s skyline is taking shape with 27 schemes completing in 2019 and a further 47 schemes are due to complete in 2020.

But the level of project starts last year slipped to 23 from 44 in 2018.

Manchester’s office sector remained most resilient across the cities with two million sq ft under construction for a second year.

A total of 3,619 homes were delivered to market this survey while an additional 12,357 units remain under construction.

The survey expects nearly 9,000 of these homes to be delivered in 2020, the highest on record since the Manchester crane survey began in 1999.

Bedford said: “The crane surveys are showing changing patterns in the retail and leisure sectors.

“Developers have moved away from big schemes favouring smaller projects – primarily linked to residential blocks – such as units for food, beverage and convenience retail.

Looking ahead, Bedford added: “Developer sentiment remains high but we’re seeing real challenges arising in the need for infrastructure investment to keep up with the pace of real estate.”

Latest news

Go-ahead for City of London’s tallest tower

1 Undershaft building will equal the Shard in height
10 hours ago

Construction T Level scrapped due to lack of demand

Courses canned after less than 100 sign-up for latest round
1 day ago

Five firms clinch £300m Greenwich Uni framework deal

McLaren, Wates, Morgan Sindall, Vinci and Willmott Dixon secure places
16 hours ago

Hill Group strikes first Build to Rent deal

House builder agrees finance with Lloyds Living to start Stevenage scheme
16 hours ago

Construction output hit by fall in repair and maintenance

Industrial and commercial new work grows despite wider fall in activity
16 hours ago

Wates transfers pension scheme to “superfund”

Pension management specialist Clara to take charge of £210m fund
16 hours ago

Muse hires new development director for North West

Tom Darby joins from developer Bruntwood
16 hours ago

Bid rigging probe launched into school repair work

Firms raided this week with focus on roofing contracts
2 days ago

McLaren hires ex-ISG regional boss for north east expansion

Andrew Beaumont becomes MD of new Yorkshire and North East business
2 days ago

Government commits to four new prisons in seven years

£2.3bn pledged for new prison build programme
2 days ago

Road and rail delays hit revenue at Van Elle

Turnover drops 5% as markets remain challenging for piling specialist
2 days ago

Boot reports ‘noticeable improvement’ in planning system

Government planning reforms already unblocking council planning
2 days ago

Go-ahead to revamp former London city hall

Project will straighten the building's leaning profile with terraces to every level
2 days ago

United Living to divert Midlands gas pipeline

600m pipeline diversion clears way for M54 to M6 link road construction
2 days ago

Credit insurance saves Billington from ISG hit

Steel specialist puts on extra shifts at its plants to cope with demand
3 days ago

M&E specialist Dodd doubles profit on retrofit surge

Family-owned Telford specialist delivers record revenue of nearly £250m
3 days ago

Go-ahead for 800-home Croydon dual towers

One Lansdowne Road build to rent scheme to cost £260m to build
3 days ago

Construction inflation set to return raising tender prices

End of 2024 to mark the bottom of present inflationary trough
3 days ago

Start date for vast Balfour and Costain carbon capture power job

£4bn Teesside project to start construction next year creating 3,000 jobs
3 days ago

Plans go in to start revamp of North Finchley town centre

Developer Regal unveils first details of Barnet masterplan
3 days ago

Glencar bags £18m Big Yellow London store

Six-storey stoarage centre to be built at Staples Corner
3 days ago

Plan unveiled for 31-storey London Fenchurch Street tower

Demolition work to start in 2026 for new office tower
4 days ago

Vinci Building buys tower cranes for first time

Contractor invests in two WOLFFKRAN all-electric cranes at £138m Sheffield site
4 days ago

30 local firms land United Utilities £500m framework

Minor works deal win for North West civils and M&E specialists
4 days ago

Restructure pays off as Higgins returns to profit

Housing contractor recovers from £25.9m loss last year
4 days ago

Former Heathrow boss joins Mace in board rejig

Firm completes string NED appointments to expanded group board
4 days ago

Planning officers to get powers to bypass committee stage for housing

Rayner reform plan to cut out local council planning committees
4 days ago

National Insurance hike to delay construction recovery

Arcadis paints varied picture with full recovery delayed until 2026
5 days ago

Gratte Bros rides out cost rises with profit increase

M&E specialist warns of further upward pressure on wage costs
5 days ago

Sellar’s 36-storey London City office tower approved

Demolition work to start in 2026 at 60 Gracechurch Street site
7 days ago

Contractor services