A total of £2.3 billion of commercial construction and refurbishment projects started across Yorkshire in the last three months of 2015; a 23.1% increase compared with the same period in 2014 according to JLL and Glenigan’s Commercial Construction Activity Index.
Significant project starts which contributed to this level of activity included the fit-out of Monks Cross Shopping Centre near York, the refurbishment of City House in Leeds and the construction of a services and logistics building for Siemens at Green Port Hull.
Looking at the wider UK picture, work began on £24.8 billion of commercial projects (new build and refurbishments/extensions) over the 12 months to December 2015, an increase of 4.3% on the previous year. This rise in the overall construction activity mirrored the trend recorded for construction output at the end of 2015 with the UK Construction PMI up from a seven month low.
“Beyond London and the South East, Yorkshire is seeing significant activity coming through which is in line with our predictions of 2016 being the year in which the major regional cities begin to move on to a higher growth trajectory in line with stronger economic prospects,” said Tony Stott, Head of JLL’s Building Consultancy team in Leeds.
“Construction activity will continue to be influenced by resource pressures, the availability of finance as well as government policy and expenditure.”
The ‘core’ commercial sectors – offices, industrial, retail and hotels – saw total UK volumes of £14.5 billion in 2015 (up 1.7% year on year). Strong underlying demographics have also continued to drive appetite for alternative sectors, notably Education. While activity dipped slightly in the quarterly comparison, Education totalled £6.3 billion across the year showing the most significant gains for any sector on annual basis (up 25.4% year on year).
Jeff Pearey, lead director – North East region at JLL, added: “Looking at the offices sector, at the end of 2015, Leeds and Manchester accounted for the greatest share of development activity across the larger city markets outside of London.
“There is a good supply of Grade A office space under construction in Leeds, with all of this due to complete in 2016; notwithstanding this there is little planned for 2017. Therefore while construction activity has increased, unless further new schemes or refurbishments are announced, there will continue to be pressure on the finite amount of prime office space available this year. Securing pre-let agreements might be the only other option for occupiers looking further ahead.”
