Thomas Moore, Director in DTZ’s Building Consultancy team in Leeds comments:
“Throughout the Yorkshire region, construction output has continued to grow since the start of 2015, with increased investment throughout the region. Leeds in particular, continues to go through an exciting period with the Victoria Gate scheme now underway linking the existing Victoria Quarter to this ambitious Leeds heritage inspired scheme. Regeneration also pushes forward in the West of the region, with Westfield scheme in Bradford, the regeneration plans for the Bradford Shipley canal corridor and Shipley town centre.
“House building continues to be strong in the region benefitting from the extension of help to buy initiative and the recent reduction in stamp duty, which may create more demand for the 3 and 4 bed housing in new build market. The social housing sector should also be busy in 2015, as housing associations focus on delivering their 2015 – 2018 allocation schemes, with funding starting in March 2015.
“However, the increase in construction output in the region has put pressure on construction resources and contractors, which in turn has lead to an upward trend in tender prices throughout 2014 which is predicted to continue leading up to the General Election.
“Contractors and suppliers are now responding more efficiently to the increase in construction work and material suppliers appear to be catching up with increased demand for bricks and blocks. However, we are seeing evidence that although the market remains competitive, costs are continuing to rise and labour shortages are becoming a real issue for main contractors and sub contractors.
“Given these issues, it is clear that deferring construction work should be avoided to reduce the risks associated with labour shortages, possible longer lead-in times for materials and the consequential effects on project programmes. A particular incentive for landlords in the case of terminal dilapidations claims, is to ensure that there is as limited exposure as possible to the rising costs. Strategies to mitigate this include encouraging tenants to implement the agreed dilapidations works before lease end transferring the risk to them, or settlement of claims based on ‘real’ tender prices with a firm intention and plan to carry out works at lease end.“
