NORTH WEST
The North West construction market is poised for growth following strategic investments in key infrastructure projects. Developers see significant opportunities in the region, particularly with major residential schemes in Manchester.
While there has been positive movement in construction output, the region continues to find it difficult to maintain a steady flow of new contracts. Last year saw a decline in project starts and main contract awards compared to the previous year.
The devolution of powers to local authorities is seen as a positive step, allowing for more tailored and responsive decision-making in the region. Overall, while there are challenges, the outlook remains positive with a focus on leveraging opportunities and addressing infrastructure needs.
MARKET CONDITIONS & PIPELINE
Positive trends in approvals and output indicating potential future growth
In the North West, project starts fell by 26% in the three months leading up to November 2024, totalling £1.66bn. Despite this, there was a positive trend in detailed planning approvals, which increased, indicating potential future growth.
Manchester remains strong in terms of residential development, albeit there has been a fall in construction output in the sector when compared with previous years. In Liverpool City Region there has been an upturn in commercial office deals. However, this is coming from a low base compared to national figures. Liverpool City Council has applied for ‘new town’ status for Liverpool North to promote regeneration.
Construction output in the North West continues to fluctuate. In Q4 2024, construction output in the region increased by 0.5% compared to the previous quarter. This growth was driven by a 1.2% increase in new work, while repair and maintenance activities remained relatively flat. Despite this quarterly growth, the region experienced a significant decline in main contract awards, which fell by 36% compared to the previous quarter. This indicates some underlying challenges in securing new projects.
Some 4,500 planning consents await determination across the region. This number reflects the ongoing demand for new developments and the workload faced by local planning authorities.
RLB Market Activity Cycle
The RLB Market Activity Cycle is a representation of the development activity cycle for the construction industry.
RLB considers 10 sectors to be representative of the construction industry as a whole. Each sector is assessed as to which of three activity level zones – peak, mid or trough – best represents the current status of the sector within the cycle. This assessment is then refined by identifying whether the current status is in a growth phase or a decline phase.
The subjective current performance of sectors is identified by ascribing one of the coloured arrows (shown in the legend of the chart) to each sector. NB: In this analysis, sectors are not individually weighted.
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Market sector activity analysis: North West
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of a region enables the calculation of a regional representation of percentage of sectors in each phase of the cycle at a point in time.
Market sector activity analysis: United Kingdom
▲ Peak Growth ▲ Mid Growth ▲ Trough Growth
▼ Peak Decline ▼ Mid Decline ▼ Trough Decline
Consolidating the results of multiple regions enables the calculation of a national representation of percentage of sectors in each phase of the cycle at a point in time.
TENDER PRICES
- The tender price forecast for the North West over the next 12 months is for a rise of approximately 3.5%. This increase reflects the ongoing demand for construction services and the impact of inflation on materials and labour costs.
- The tender price forecast for the region over the next two to three years is predicting a steady increase of around 4% per annum.
Tender price change: North West
▉ RLB North West
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors (High) ▉ Competitors (Low)
INPUT COSTS
- Mechanical and electrical trades remain heated. The prices of steel, timber, insulation, concrete, cement, bricks and blocks are all increasing. This will affect tender pricing if the market heats up significantly.
- Labour costs have increased due to recent wage awards. If the market does pick up significantly, then shortages of skills and labour will inevitably have an upward pressure on pricing.
SECTOR FOCUS
Commercial
During the three months to December 2024, activity climbed by 2% compared to the preceding quarter. Notable commercial projects are progressing in both Manchester and Liverpool, evidencing the sector’s resilience. Despite these positive signs, the region has faced a decline in main contract awards and detailed planning approvals.
Data Centres
Significant data centre construction projects are underway, reflecting the region's growing importance for digital infrastructure investment and its reputation as a hub for technology and innovation. The new £350m Kao Data facility in Stockport will be one of the largest data centres in the North of England. Another notable project is Broadway House in Manchester.
Education
Overall, the education sector is showing positive trends, with significant investments and a strong pipeline. The North West was the most active region for detailed planning approvals in the education sector, accounting for a 13% share of total approvals in the UK. This indicates a strong pipeline of future projects with school projects dominating the sector in terms of construction starts. Colleges and universities also saw growth, with college projects increasing by 55% and university projects by 15% compared to the previous year.
Healthcare
The North West is seeing robust activity in healthcare construction, driven by the need to upgrade and expand healthcare facilities. The value of healthcare construction projects starts indicates a strong rebound in the sector. Projects include Tameside General Hospital and the Emergency Care Campus in Stockport. There is a healthy pipeline of future projects, with detailed planning approvals showing positive trends, indicating continued investment and development in the sector.
Logistics & Manufacturing
There has been continued growth in logistics and manufacturing construction, driven by strong demand and investment. The North West is expected to see the largest rental increase in warehouse space of any UK region as businesses increasingly focus on near-shoring to mitigate risks caused by global disruptions. This trend is also driving demand for manufacturing facilities in the region. There are several manufacturing projects in the pipeline, with a focus on creating high-quality, strategically located facilities.
Public & Civic
Key major projects are ongoing with several local authority initiatives aimed at reviving town centres and community areas in the pipeline. These include projects to increase connectivity to the main conurbations, reflecting a strong commitment to enhance public and civic infrastructure in the region.
Residential
While construction output has slowed compared to recent years, there is still a strong pipeline. Several significant projects are underway or planned for the near future in Manchester and the Liverpool City Region. These projects reflect a strong demand for residential housing in the region, driven by population growth and urban development initiatives. Some of the current schemes will inevitably be delayed by the higher-risk building restrictions and gateway process associated with the Building Safety Act.
LIVERPOOL, UK
Merseyside Fire and Rescue Service
RLB’s cost management expertise was integral to the delivery of a new £40m training and development academy for Merseyside Fire and Rescue Service (MFRS).
The state-of-the-art facility, the UK’s most technologically advanced emergency service training site, will equip Merseyside’s firefighters with the skills and knowledge they need to save life and property in a range of fire and rescue scenarios.
Data and analysis compiled by:
