Deloitte launches its regional crane survey
Developer confidence is upbeat across several of the UK’s regional cities, with 74 new construction starts recorded in 2022. Residential developments took the lion’s share of new starts (37), according to the Deloitte Regional Crane Survey.
The latest crane survey series monitors construction activity in the central areas of Belfast, Birmingham, Leeds, and Manchester. In 2022 the four cities recorded sustained or increased levels of development activity across a range of sectors including offices, residential, hotels, retail, education, and student housing.
Commenting on the survey’s findings, John Cooper, partner in real assets advisory at Deloitte, said: “Developer confidence is a key indicator for economic health and, despite many market uncertainties over the last few years, construction in our surveyed UK regional cities remained remarkably resilient. A key trend for this survey was the delivery of new accommodation as we saw record numbers of student beds as well as hotel beds under construction. In addition, over 6,500 new homes were delivered to market in 2022, while more than 21,500 homes remain under construction – reinforcing more sustainable patterns of urban development and creating great places to live and work.”
New offices under construction totalled around 3.66 million sq ft last year, down on the five-year average of 4.34 million sq ft, and 1.38 million sq ft was delivered to market during the survey. Cooper added: “However, we have seen office schemes return to planning as developers respond to the rapidly changing demands of occupiers who seek flexibility, high-quality amenities and a workspace that meets sustainable and wellbeing targets. We expect to see developers significantly pushing the boundaries of office design to not only meet the requirements of occupiers but to maximise the long-term adaptability potential and futureproof their investment.”
Exploring the key cities, the crane survey monitors construction activity in:
Belfast: The construction of new university buildings and student accommodation were the key drivers of development activity in the Northern Irish capital in 2022. Almost one million sq ft of new education space opened at Belfast’s two universities and the provision of student accommodation was similarly brisk, with an additional 1,850 bed spaces under construction, including two new schemes of more than 400 bed spaces starting construction last year.
Across all construction sectors, a total of 23 major schemes completed or were under construction in 2022, the same as in 2021, and nine new schemes broke ground in Belfast during the survey.
Birmingham: Birmingham had a total of 43 schemes underway compared to 34 in 2021 – an increase of almost a third. Of the 18 new schemes breaking ground in the UK’s second city, it was residential developments that led construction activity with 13 new schemes totalling 6,487 residential units under construction, up 37% on 2021 (4,720). In addition, a record-breaking 2,398 homes were delivered to market last year – the highest delivery of new homes recorded in the survey’s 20-year history. The survey also suggested Birmingham’s skyline is set to change as the demand for good-quality, city centre homes continued and with schemes of 50-storeys or more in planning.
The development of office space in Birmingham bounced back and was up 40% from the previous survey, totalling nearly 867,000 sq ft under construction.
Manchester: 25 new projects began construction in Manchester and Salford city centres in 2022, with residential schemes continuing to deliver high numbers of new homes. Over 2,700 homes were delivered to market last year. Despite this slight dip for the first time in seven years, there was no sign of slowdown with 17 new residential schemes breaking ground. Combined with developments on site from previous years, these are set to deliver over 11,750 new homes over the next three years.
There was also a record delivery of new hotel rooms in Manchester of over 1,500, with an additional 691 under construction. Office construction remained strong with 1.7 million sq ft being built, including an additional five new schemes comprising 1.1 million sq ft of new office space. Notably, the creation of an additional six acres of green space in the heart of Manchester was recorded in the crane survey.
Leeds: The popular university city had 22 new construction starts in 2022 - the second highest since the crane survey began in 2006. Student accommodation was a significant driver of development activity with seven new starts bringing the total to a record-breaking 11 schemes currently under construction. These schemes are set to deliver 3,294 student bed spaces, recognising the significant investment by the city’s higher education institutions.
Eight residential schemes completed last year in Leeds delivering 1,390 homes to market, while five new schemes broke ground adding to the 3,226 homes under construction. The survey also recorded over 850,000 sq ft of office space under construction and two new office starts.
Cooper continued: “Whilst we expected some lag in delivery following a construction slowdown during peak pandemic, development activity across the quartet cities remains positive and, in some cases, record-breaking. The residential sector is showing no signs of slowdown with large numbers of homes still in the development pipelines across the cities. But it is the education sector that stands tall in construction activity as universities are the catalyst for growth and are creating a sense of space, and therefore a platform to invest. Developers are reacting by building significant numbers of student bed spaces, demonstrating the cities’ commitment to not only student attraction but graduate retention.”
Dan Barlow, managing partner regional markets at Deloitte UK, commented: “Supporting UK inclusive growth is about enabling people and places to reach their potential. I am encouraged by the findings in the latest crane survey series as it’s clear to see these regional cities are contributing to levelling up. However, investment by both the public and private sectors will need to continue to help inclusive economic growth as well as creating vibrant places where people want to live and do business.”