NORTH WEST
While the market seeks clarity on the new government’s policies and cautiously awaits the outcome of the Budget in October, significant schemes are still moving forwards. There are multiple developments underway or in the planning process across the North West, which will support wider economic growth.
Some of these projects are set to transform the skylines and urban environment of the region’s biggest cities, including Manchester’s first 70-plus storey buildings and the long-awaited £200m Pall Mall commercial development in Liverpool.
Industrial construction has also been boosted by significant new developments as the region continues to attract investment from the automotive, aerospace, pharmaceuticals and chemicals industries.
MARKET CONDITIONS & PIPELINE
Major project starts down but planning approvals increasing
While construction activity in the North West has fluctuated recently, there are positive signs of growth and significant projects in the pipeline.
Projects starting on site in the region during the three months to April 2024 fell by 3% compared to the preceding three months, and were down 27% compared to the same period last year. Major project starts (valued at £100m or more) saw a significant decrease, while underlying project starts (less than £100m) showed a slight increase.
Private housing remains the most active sector, despite a decline in value compared to last year. Manchester’s construction activity continues to be dominated by residential developments such as Vista River Gardens (1,500 apartments) and First Street South (2,224 co-living spaces).
Detailed planning approvals have increased slightly, up 1% compared to the previous quarter and up 3% compared to last year. There has been a notable rise in planning approvals for major projects.
Market sentiment is still cautious but hopeful the direction of travel under the new government will become clearer in the coming months, giving developers the required confidence to commit to pre-planning activity.
The region continues to benefit through funding from the Levelling Up Fund to a higher degree than the rest of the UK.
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
Tender pricing currently stable but labour costs remain key factor
There has been no significant overall change in the tender prices submitted by contractors this quarter.
Looking ahead, the ongoing shortage of labour and specialist skills in the industry will continue to be one of the biggest factors affecting pricing levels.
Tender price change
▉ RLB North West
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors (High) ▉ Competitors (Low)
INPUT COSTS
- The impact of key movements in commodity and material prices on tender pricing has been in line with national inflationary trends.
- Skills and labour shortages continue to have an impact on construction costs. This is also having an adverse effect on product quality.
SECTOR FOCUS
Commercial
New build commercial development opportunities are limited but several significant fit-out projects are underway in response to the ongoing demand for prime office space.
Data Centres
We are seeing continuing investment in data centres in the Manchester area. Blackpool Council is attracting significant interest in the Silicon Sands enterprise zone, a high-technology business park centred around low-carbon data centres and powered by renewable energy.
Education
The pipeline within the North West’s higher education sector is increasing with a mix of academic and student residential schemes for several of the region’s universities.
Healthcare
NHS Trusts have significant schemes on site and in pipeline. With generally ageing estates, the need to redevelop or refurbish remains high, particularly given the record-long waiting lists for acute services in the wake of the pandemic. However. with many Trusts now identifying RAAC issues with roof planks, there are funding pressures at all levels of the system.
Infrastructure
The £1.5bn scheme to redevelop Liverpool Central Station will not just enhance passenger capacity but create opportunities for regeneration of the city centre including a significant mixed-use development. The new Isle of Man Ferry Terminal, part of the £5bn Liverpool Waters regeneration project, is now open.
Logistics & Manufacturing
We are seeing significant activity in logistics and manufacturing which remains a dominant sector in the region. Key developments include Logistics North in Bolton, the largest live commercial development in the North West, and Pharmaron’s gene therapy development and manufacturing facility at Liverpool.
Public & Civic
Liverpool City Region Combined Authority is looking at the redevelopment of all the major bus depots in the region following the decision to move to a bus franchising model, bringing bus services back into public ownership.
Residential
Residential development continues to be the largest sector in the region, with Manchester up to 30% higher in residential schemes compared to Liverpool. More confidence in the market is still required before the larger developers will enter the Liverpool City Region.
Retail
Activity in the region’s retail sector remains focused on repurposing and refurbishing existing buildings to improve the customer experience rather than investing in the development of new schemes.
MANCHESTER, UK
Printworks
Manchester’s Printworks entertainment complex has undergone a comprehensive £21 million refurbishment, solidifying its position as a leading destination for leisure activities.
The project boasts a massive 1,000 sq m digital ceiling screen – the largest in Europe. RLB, with its cost management expertise, played a key role in delivering this project.
