The Glenigan Index for February, which covers the value of projects starting on site in the three months to January, is 2% down on a year ago
Although there was a significant decline of 17% in new civil engineering schemes, falling levels of social housing and public non-residential building have contributed to a subdued performance across the industry, Glenigan notes that none of the main sectors expanded by more than 1% in the latest period. It points to investor confidence and the flow of new developments remaining strong, with a 10% rise in the value of projects achieving detailed planning consent during 2014.
Glenigan also found 1,250 previously stalled projects were brought back into development during 2014, a 13% rise on a year earlier.
The industrial sector was particularly buoyant with starts rising by 46% in 2014 and has maintained this momentum into the New Year, with the latest reading showing a 48% increase relative to a year earlier. This surge has been driven by strong demand for logistics and distribution space, with clients bringing forward a number of large schemes. Glenigan tracked 21 industrial projects worth between £20 million and £100 million starting on site during 2014, including the £77 million’Thunderbird 2 distribution project in Kettering, Northamptonshire.
A 40% year on year rise in detailed planning approvals in the final quarter of 2014 suggests the sector will remain a good source of work during the coming year.
Forecasts for the education sector were also found to be positive, with the flow of school projects set to expand strongly over the coming year. However, work under the Priority School Building Programme had so far been slow to materialise, contributing to the 12% fall in education starts over the last three months. But Glenigan believed that a 21% rise in detailed planning approvals over 2014 suggested an ‘upcoming improvement in sector activity’.
Meanwhile, the commercial sectors continue to perform solidly, with office, retail and hotel and leisure starts up by 2%, 5% and 10% respectively.
“At this stage a year ago workloads were expanding at a remarkable rate, with the January 2014 Glenigan Index seeing a record 35% increase in project starts – the peak of a 17-month run of consecutive growth,” stated Allan Wilén, Economics Director, Glenigan. “However this expansion moderated downwards through the end of last year.”
Allan Wilén, Economics Director, Glenigan – none of the main sectors expanded by more than 1% in the latest period.