YORKSHIRE & HUMBER
Yorkshire & Humber is continuing to attract investment from private developers and there is also a good level of opportunity with public sector clients. The residential sector remains strong as clients continue to drive developments, particularly with retrofit and affordable housing which may be a consequence of government targets. Healthcare has been a key sector for the region over the past decade, but with public funding constraints we anticipate major schemes in the pipeline being put on hold.
The Building Safety Act and obtaining approvals from the Building Safety Regulator currently appear to be the biggest contributor to slow progress and hindering developer confidence. We anticipate tender prices will increase with the continued skills shortage, the hike in National Insurance, and enhanced regulations to meet net zero. Despite these challenges, the long-term outlook remains positive.
MARKET CONDITIONS & PIPELINE
Market growth driven by residential developments in region's major cities
The market sentiment in the Yorkshire & Humber construction sector is generally optimistic. There is significant development activity in and around the region’s larger cities such as Leeds, Sheffield, Bradford and York.
Leeds remains a focal point for development, particularly in high-rise residential and commercial units. The residential market in Sheffield is still very active. In Bradford, City Village will see more than 1,000 homes built on three locations in the city centre. York Central is one of the UK’s largest city centre regeneration schemes and a mix of commercial and residential units will be developed over the coming years.
Outside of the cities, there remains a push to deliver residential units to meet housing targets, and additional sites and development zones are being prioritised by local authorities to stimulate growth in employment in the industry and logistics and manufacturing sectors.
Local authorities are under pressure to build more social and affordable housing and therefore this subsector should see increased growth as the government has targeted the construction of 90,000 social units per year.
Residential developers, however, are nervous about proceeding with schemes as delays in planning and approvals, coupled with high interest rates, are creating a risk to project delivery and viability.
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: Yorkshire & Humber
▲ 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 Yorkshire & Humber over the next 12 months is for a rise of approximately 3.50%.
- For 2026 and beyond, a steady increase is forecast, typically around 3.50% to 3.75% per annum.
Tender price change: Yorkshire & Humber
▉ RLB Yorkshire & Humber
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors (High) ▉ Competitors (Low)
INPUT COSTS
- MEP remains heated, as do some of the more traditional trades such as bricklaying and façade specialists.
- We are not seeing hyperinflation and erratic pricing as much as we were. Insulation costs are typically at the higher end of the range. The availability of materials, particularly imports, could be indirectly influenced by global issues.
- Skilled labour shortages continue to pose challenges for the industry and statutory pay increases will compound the issues.
SECTOR FOCUS
Education
In higher education, there are significant challenges locally with institutions facing reduced revenues, falling international student numbers, and staff and energy cost increases. Most capex spend relates to refurbishment or maintenance projects due to lack of long-term budget security.
The schools sector is continuing to develop with the DfE’s push for academisation. The change in government created some uncertainty but investment has been reignited, particularly around provision for pupils with special educational needs and disabilities (SEND).
Energy
On-site construction activity has commenced on Yorkshire GREEN, an initiative by National Grid to upgrade and reinforce the high-voltage electricity network to improve the transfer of clean energy across the country. The region has seen several permissions being sought for rural solar farms and battery storage facilities, particularly in East Yorkshire which benefits from larger expanses of flat land.
Healthcare
With 33 NHS providers within the region, there remains good opportunities in both new-build projects and refurbishments of the ageing estate. But delays to plans such as ‘Building the Leeds Way’, a new hospital programme, will mean a refocus on the short to medium-term plans of Trusts to maintain and develop their estates.
Logistics & Manufacturing
The vacancy rate in Yorkshire stands at 9.63% (compared to the North East’s 2.40%) due to the addition of new speculatively developed space and second-hand space. However, 12% of this vacant warehouse space is under offer and expected to exchange in Q1 2025. The demand for logistics and industrial property fell slightly in Q3 2024, but overall demand for 2024 was still 15% ahead of 2023.
Public & Civic
The outlook is reasonably optimistic outlook with the continued push for investment in regeneration, infrastructure and placemaking, and rationalisation of existing estates and improvements to historical assets. Access to external funding, such as the Heritage Lottery Fund, and the drive of the new combined local authorities, which are starting to find their feet, may mean that aspirations could become reality.
Residential
Some sizable schemes in Leeds and Sheffield are planned to start on site in 2025. Large developments and high rise build-to-rent schemes, however, continue to face challenges with Building Safety Act approvals. Private housing developers are still struggling with viability, compounded by high interest rates, changes to stamp duty bands and obligations to provide affordable housing targets.
NOTTINGHAMSHIRE, UK
Ashfield District Council
RLB has been working closely with Ashfield District Council since 2021 to deliver social housing schemes in the north of Nottinghamshire. We have provided contractual advice, commercial assurance and employer’s agent services across the schemes.
We have delivered a total of 62 dwellings to date with a further 60 dwellings currently on site and under construction. We are now working with the local authority to develop a strategy for the delivery of the next phase of its residential programme.
