Regional bright spots emerge for construction

Prospects for the construction industry are improving in various regions across the UK.

The North West looks set to benefit as work in the pipeline has leapt by 44% in the past quarter according to Glenigan’s latest construction market analysis.

In the three months to May 2022, the underlying value of projects securing planning permission in the region has reached £2.6 billion.

Glenigan Economics Director Allan Wilén said: “This underlying total excludes projects valued at £100 million or more, which gives a better guide to wider health of the industry as data is not spiked by major projects.

“Including major projects valued at over £100 million and the growth in the North West is even stronger at 61% with £3.2 billion-worth of work approved. This shows that the short-term outlook for the region is strong.”

Big projects in the pipeline include the £87 million No 3 Circle Square commercial development in Manchester (Project ID: 19154471). Contractors have returned bids according to Glenigan’s construction research and joint clients Bruntwood and Legal & General expect work to start in the Autumn.

Work is also expected to start late this year on the £100 million second phase of the St Michael’s residential development in Manchester (Project ID: 21567047).

South East strong

The best performing region over the last three months in terms of construction work beginning is the South East.

Just over £2.2 billion-worth of construction work started on site, which is a rise of 30%. Including schemes valued at over £100 million, the growth of starts in the South East is even stronger at 38%.

The biggest project in the region is a £400 million redevelopment of Shepperton Studios (Project ID: 21007589).

Laing O’Rourke started work on this scheme in March and, as a result, has the biggest order book in the South East according to Glenigan’s market intelligence.

South East - Top 10 contractors June 2021 to May 2022 by value

Contractor	Number of Projects	Civil (£m)	Building (£m)	Total (£m)
Laing O'Rourke	3	0.0	600.0	600.0
Morgan Sindall	57	1.0	359.7	360.7
Sir Robert McAlpine	8	30.0	250.3	280.3
Kier	32	113.0	164.4	277.3
VolkerWessels	18	261.3	14.2	275.5
Galliford Try	18	59.2	113.7	172.9
VINCI	8	62.0	91.0	153.0
ISG	9	0.0	149.2	149.2
Willmott Dixon	20	20.0	125.0	145.0
Hill Partnerships	4	14.9	123.2	138.1

Source: Glenigan

Projects in the South East securing detailed planning approval are also up by 10% at both an underlying and overall level, suggesting that the short-term outlook also remains positive.

Major schemes in the South East with planning and due to start later this year include the £100 million Nicholson Quarter office and residential development in Maidenhead (Project ID: 21348446) and the £50 million first phase of a redevelopment of the Lakes Estate in Milton Keynes (Project ID: 22166790).

West Midlands winning

The prospects for the West Midlands are also strengthening. The underlying value of work in the pipeline is up 28%, while work starting on site is up 17%.

Work in a range of sectors is coming up in the West Midlands.

Plans have been approved for the £51.5 million i54 Western Extension industrial scheme at Pendeford. Glenigan’s research suggests work could start this summer but a contractor has yet to be appointed (Project ID: 21539695).

Construction of a £55 million scheme for 454 flats on the site of a former Irish Centre in Digbeth is also expected to start later this summer (Project ID: 20202979).

Pipeline

A strong pipeline of work could transform prospects in the North East, where approvals are up 32% in the latest quarter. Tenders have been returned for a £50 million revamp of the Tyne Bridge in Newcastle (Project ID: 19206202).

While the wider economy faces challenges, bright spots are emerging for the construction industry in a number of regions.

Glenigan customers can see details of all the projects outlined in this article if part of your subscription.

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