Office construction work boosts commercial sector

A rise in approved plans for new office construction work is boosting the pipeline in the commercial sector.

The short-term outlook may appear gloomy, with a decline in new commercial orders helping push the latest CIPS/S&P UK Construction Purchasing Manager’s Index to its lowest level since May 2020. However, the two other main constituents, residential and civil engineering fared worse than the commercial sector, where there is a major tranche of office work due to start in the coming year according to Glenigan’s own construction industry research.

Glenigan’s construction data found 20,713 office schemes with a start date due in the 12 months from 17 October 2023 to 17 October 2024.

Planning ahead

This expected workload has been boosted by a 21% rise in office projects securing planning permission in the three months to September 2023, when £2,409 million-worth of work was approved.

Major projects, such as the £100 million Camro Plus Data Centre in Cambridgeshire (pictured), which has approval (Project ID: 08033245) can spike these figures, but smaller schemes are also progressing.

A total of £1,152 million-worth of office work at an underlying level (below £100 million) also secured planning permission in the latest quarter. This total was 16% up on the same period a year earlier.

Approved office schemes due to start in the year ahead include a £23 million plan from Native Land to create new office space at 186 City Road in Islington, North London (Project ID: 22442290), and a £43.7 million development for Viridis in Westminster (Project ID: 22304421).

Office capital

London is typically the driver for office work and a number of other approved schemes are moving through the pipeline and should start over the next 12 months.

Tenders have been returned for a £20.5 million office scheme at Peterborough Road in Hammersmith, West London, where Glenigan data suggest work will begin in February (Project ID: 17086527)

Contractors have also returned bids for a contract to build an administration building for Telehouse at Tower Hamlets in East London (Project ID: 22335039).

Regional office push

A consequence of the Covid-19 pandemic has been a migration of some workers and companies outside of London, which has helped office development in the provinces and a number of sizeable schemes are expected to start there in the next year.

In Manchester, The Republic, a £92.5 million office scheme (Project ID: 19385575) in the Mayfield Quarter development (Project ID: 13296958), should commence in April.

The £95 million Sherford Business Park north of Plymouth in Devon (Project ID: 21218074) was recently granted planning permission and Glenigan’s construction market research shows work will begin in March 2024.

A £36.5 million redevelopment of 150 St Vincent Street in Glasgow to provide 150,000 sq ft of office space could begin in February with bids for the construction contract all now received (Project ID: 22014403).

The road to recovery in the office sector may not be smooth but a path is opening up with a substantial programme of work both approved and due to start in the next year.