Industrial construction projects in the pipeline rise

The value of detailed planning approvals for industrial projects in the three months leading up to September more than doubled on the same period two years ago, according to Glenigan research.

The value reached £2,768m which was 119% higher than the same period in 2019 and 27% up on 2020’s figures.

The research company’s economic analyst Rhys Gadsby said: “Project-starts remained very low compared with previous years. However, the development pipeline is very strong with increases in both main contract awards and detailed planning approvals.”

Detailed approvals for schemes under £100m were strong totalling £2,456m from June to August up 111% on the same period for 2019 and 70% up on last year.

Industrial work starting on-site during the three months to August reached £738m, down 15% on the previous year and 39% compared with 2019. No major projects, £100m or more in value, started on-site in contrast to both the previous year and two years ago. Project-starts of less than £100m in value were similar to the previous year but declined by a third compared for the same period in 2019.

“This demonstrates the clear impact the pandemic has had on the industrial development pipeline,” said Mr Gadsby.

Manufacturing accounted for more than half of industrial project-starts during the three months to August at a value of up to £379m. The segment experienced a 19% decline on the previous year and a 35% fall against the same period in 2019.  Warehousing and logistics work starting on-site totalled £245m, accounting for a third of sector-starts.

Like manufacturing, warehousing and logistics project-starts experienced declines against the previous year and 2019 with falls of 30% and 58% respectively.

Flagship sports projects boost hotel and leisure 

The hotel and leisure sector saw a dramatic increase in the value of contract awards in the three months up to September – a 112%  increase on 2020 and 22% higher than in 2019.

Smaller schemes of less than £100m totalled £1,192m in value – a 21% increase on the previous three months and 93% up on last year with an 11% rise on 2019.

“It is reassuring to see such growth in contract awards and it will benefit the sector going forward,” said Mr Gadsby.

But detailed planning approvals stood at £983m in value for June to August – a 45%  year-on-year decline and 25% lower than 2019.  Detailed approvals for schemes under £100m totalled £873m – a 41% drop on 2020 and down a third on 2019.

Sports facilities project-starts totalled £603m during the three months to August and accounted for 46% of the sector. The segment experienced 758% growth against the previous year and 58% compared with the same period in 2019. This was largely due to work starting on the new £505m Everton Football Club stadium at Liverpool docks.

Indoor leisure facility project-starts accounted for 9% of new work and was the only other segment to achieve growth against the previous two years. The value of work starting on-site totalled £114 m – an increase of 106% against the previous year and 22% up on 2019.

Hotel project-starts accounted for a third of starts, rising 87% against the previous year to total £453m. However, the value fell 59% compared with the same period in 2019.

Property finance intermediary Hank Zarihs Associates said Glenigan’s research showed construction was in a good place and that lenders were keen to offer construction loans to developers building in-demand sectors.