Glenigan’s UK Construction Industry Forecast 2022-2024 indicates the construction industry is facing challenging economic conditions, particularly within consumer-related areas, but a firm development pipeline is predicted to lift industrial and office starts in 2022, as well as Government-funded areas such as education, health and community and amenity.
While major project starts have been low in the office sector, an increase in conversion and refurbishment schemes has boosted project starts in both 2021 and 2022 as tenants and landlords adapt premises to accommodate changing working practices. Office work starting on-site is anticipated to increase strongly throughout the forecast period following several years of uncertainty.
The report finds that the development pipeline in London was strong throughout the pandemic. Project approvals in the Capital in 2020 increased 58 per cent following 46 per cent growth in 2019. However, the value of approvals in London dropped by 37 per cent last year and have fallen further during the first five months of 2022 as developers have assessed the impact of hybrid working on the overall demand for office space and become more cautious of bringing forward new build projects.
Office project starts have performed strongly in UK regions outside of London in recent years, largely due to activity in ‘core’ cities such as Manchester, Birmingham and Leeds. Detailed planning approvals in these regions have also performed strongly, increasing every year since 2018.
However, firms considering their need for office space, plus developments already on-site boosting current supply levels, may hold back new office developments in the short term. It is anticipated that a high number of refurbishment schemes will boost sector activity over the forecast period. Overall, it’s anticipated that projects will increase by 10 per cent in 2022, before increasing 7 per cent in 2023 and 16 per cent in 2024.
To download Glenigan’s UK Construction Industry Forecast 2022-2024 click here.