YORKSHIRE & HUMBER
Leeds and Sheffield are strong economies with the residential sector remaining key to their continued growth, which can be seen in the number of ongoing and new projects coming to the market. This is especially evident in Leeds which is currently ranked in first place in the country for new housing planning applications and transactions.
Against an unsettled economic backdrop, construction prices remain relatively stable while contractors grapple with increasing labour costs, offset somewhat by the tempering effect of a slowing of opportunities in some sectors and a relaxation of material prices.
Short-term, there is prospect of some caution and headwinds while the new government sets out its priorities and spending commitments for the future. However, we are hopeful that they can develop a long-term strategy for the country that filters through into a more stable plan for the construction sector.
MARKET CONDITIONS & PIPELINE
Confident outlook tempered by funding and skills concerns
Major developments including Sheffield Policy Campus and West Yorkshire Mass Transit are driving demand across a range of sectors, underpinning confidence in the region’s medium to long-term outlook.
Leeds is a hotspot for new homes and continues to see significant projects being submitted for planning approval, including Aire Park Phase 2 (502 homes) and Armley Gyratory (400 apartments). But starts on residential projects in the region have slowed this quarter due to the ‘wait and see’ effect of the general election.
Placemaking is now more prevalent in development opportunities in the region with the new emphasis on living and working within city centres. The demand for flexible, high-quality commercial spaces is still strong as hybrid working remains the norm.
The region’s confidence is being tempered by budget constraints across the public sector and the lack of clarity over the new government’s spending priorities. Labour shortages have continued to add pressure to wage inflation and construction costs, affecting project viability.
Contractors are cautious and their reluctance to take on uncertain commercial risk is a key feature of contract negotiations. This is both slowing progress and further inflating construction costs across the supply chain as contractors strive to maintain a reduced risk profile.
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
Public investment and economy will determine long-term outlook
There has been minimal change in overall pricing levels since the last quarter with the general election dampening new opportunities, and material inflation having settled and reduced in areas. The key challenge remains the labour shortage and the impact this continues to have on labour price inflation.
There is cautious optimism among contractors over their future pipeline of work, but the long-term outlook on tender prices is hard to call until there is clarity on the spending priorities of the new government and given the backdrop of economic uncertainty.
Tender price change
▉ RLB Yorkshire & Humber
▉ BCIS (National) TPI ▉ BCIS (GBCI)
▉ Competitors (High) ▉ Competitors (Low)
INPUT COSTS
- Steel prices continue to fall while other commodities remain relatively stable, which is reflected in the mixed picture we are seeing.in material prices.
- Material prices have fallen slightly overall with the biggest drops in plywood and reinforcement bar. Metal doors and windows have continued to increase in price.
- Due to the skills shortage in construction, labour prices continue to increase generally adding further pressure to the viability of projects. Facade contractors are in particular high demand.
SECTOR FOCUS
Commercial
The continued shift to high-quality office space is prevalent in Leeds and Sheffield, with many public and private sector clients reviewing their office environments to support hybrid working and their route to net zero.
Infrastructure
West Yorkshire Combined Authority has launched the public consultation on the proposed routes of the £2.5bn new tram network connecting Leeds and Bradford. Other major infrastructure projects that are underway include the Dogger Bank Wind Farm, the York Central regeneration project, one of the largest of its kind in the UK, and the Monk Fryston battery energy storage system near Selby.
Education
Significant challenges in the higher education sector are slowing investment in new schemes. These challenges include reductions in international student applications, wage inflation and the cap on tuition fees, coupled with the need to rationalise and modernise estates and support decarbonisation efforts.
Residential
Residential continues to be a buoyant sector in the region with multiple developments underway or in the planning process. Leeds retains its position as one of the best cities in the UK for investing in residential developments due to the return on investment and demand for housing in the city. The picture is similar in Sheffield with Homes England providing £67m of funding to develop two neighbourhoods at new Furnace Hill and Neepsend, creating 1,300 homes in the city centre.
GOOLE, UK
Goole Hub
RLB is supporting East Riding of Yorkshire Council with project management, cost management and principal designer services for the redevelopment of East Riding Leisure Goole.
The project – part refurbishment and part new-build – will transform the leisure centre into the Goole Hub, a multi-service centre providing a range of services for the local community.
The new building’s facilities will include an improved gym, a learner pool, a state-of-the-art six-lane bowling alley, and the town’s library.
Partly funded by the Goole Town Deal, the redevelopment is due to commence on site by the end of 2024.
Data and analysis compiled by:
