While project starts and main contract awards fell in the three months to January, detailed planning approvals increased on the previous year and preceding three months, to provide a boost to the development pipeline.
Offices overview
Office work starting on-site totalled £1.210bn during the three months to January, a 33 per cent decrease compared with the preceding three months and a 26 per cent drop on the previous year. Major projects (£100m or more) totalled £120m during the period, which is 60 per cent lower than the previous three months and 75 per cent less than the previous year. Underlying project-starts (less than £100m in value) decreased 26 per cent against the preceding three months on a seasonally adjusted (SA) basis to stand 7 per cent down on a year ago, bringing them to a total of £1.090bn.
Totalling £1.549bn, office main contract awards decreased 30 per cent against the previous quarter to stand 22 per cent down on the previous year. At £690m, major project contract awards experienced a mixed period with the value decreasing by 39 per cent during the quarter but still 11 per cent higher than a year ago. Underlying contract awards declined 14 per cent against the preceding quarter (SA) and by 38 per cent against the previous year to total £859m.
Office detailed planning approvals, totalling £3.101bn, more than doubled in comparison with both the preceding three months and the same period a year ago. Underlying approvals at £1.651bn, experienced a 59 per cent increase on the preceding three months (SA) and 33 per cent growth on a year ago. Major project approvals experienced an even greater increase, growing more than three times against the preceding three months and tenfold compared with a year ago, bringing them up to a total of £1.450bn.
Size of office projects
Two large value bands experienced a strong period for project-starts during the three months to January. The ‘£50m to £100m’ value band was the best performing in terms of growth, with project-starts rising 68 per cent against the previous year to total £323m. The ‘£20m to £50m’ value band also experienced strong growth, with the value of project-starts climbing 23 per cent against the previous year to total £422m.
In contrast, the ‘Over £100m’ value band totalled £120m during the period, experiencing a 75 per cent decline against the preceding year’s levels.
The ‘£10m to £20m’ value band decreased against last year’s levels (-60 per cent), with project-starts totalling £79m during the quarter, while the ‘£5m to £10m’ value band fell 20 per cent with a total of £146m.
Project-starts in the ‘Up to £5m’ value band almost halved compared to the previous year to total £118m.
Regional
London was the most active area of the UK for office project-starts, accounting for 65 per cent of the total value during the three months to January. This was in part thanks to the value increasing by 5 per cent compared with the previous year’s levels. Office work starting in London totalled £791m. The North West was the second most active region for the sector, with a share of 11 per cent and a total of £136m, despite a 17 per cent decline against the previous year. Further slowdown was prevented by a £87m office & commercial units’ development in Manchester.
The South West (-88 per cent), totalling £20m, and the North East (-82 per cent), totalling £8m, experienced particularly poor periods for office starts against the previous year, accounting for 2 per cent and 1 per cent of the sector respectively. In contrast, Northern Ireland, where the value of starts totalled £16m, increased 811 per cent year-on-year, although it still only accounted for 1 per cent of sector starts. The East Midlands (+573 per cent) and Scotland (+136 per cent) also experienced sharp growth compared to the preceding year, totalling £33m and £68m, respectively.
In line with the overall trend, most regions experienced a growth in office detailed planning approvals. London had the biggest share (38 per cent) of planning approvals in the sector, with a total of £1.190bn. It more than tripled compared to last year’s figures and was boosted by the approval of a £180m office development in Southwark. In second was the South East which increased 312 per cent against a year ago and accounted for 33 per cent of the sector to total £1,022m. Projects approved included the £800m Pinewood Studios Screen Hub development in Iver.
Despite only accounting for 4 per cent of office approvals, growth-wise Yorkshire & the Humber were the most successful region, with the value increasing more than five times compared to the previous year. Office planning approvals there totalled £112m. The East of England, accounting for 10 per cent of the sector with a value of £318m, was also a high-growth region, with planning approvals increasing 384 per cent on a year before. In contrast, the South West and the North East performed much worse, with a decrease of 87 per cent and 94 per cent respectively.
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