Unsupported browser

For a better experience please update your browser to its latest version.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Office and industrial growth in 2011

Several areas of construction will grow in 2011 despite the overall industry shrinking, according to forecasts from business intelligence unit Glenigan.

The office and industrial sectors are predicted to see the most growth, but private housing, retail and infrastructure are also forecast to provide more work than last year.

Glenigan forecasts an overall shrinkage of 2 per cent across the industry in 2011, the same level predicted by the Construction Products Association in December.

But while the public sector will continue to suffer in the wake of the spending cuts outlined at the Comprehensive Spending Review, the private sector will begin to recover in earnest, according to Glenigan.

The forecast said: “While access to finance capital remains a constraint upon activity in both the private housing and the commercial property markets, the flow of projects in the pre-construction pipeline has improved.

“The coming year is forecast to see a turnaround in new office and industrial projects and a modest rise in private housing activity.

“The civil engineering sector is also forecast to remain firm. Having weathered the economic downturn, the flow of underlying project starts is forecast to be sustained during the coming year by an increase in rail and energy projects.

“The sector will receive a further boost as a number of major projects, such as Crossrail, gather momentum.”

The office sector is set to grow by 41 per cent this year, having shrunk by an estimated 10 per cent in 2010. The office sector was decimated by the recession, so any recovery comes from a low base.

However, it is this lack of activity over the past two years that could rescue the office sector, at least in central London. Such a small amount of new floorspace has become available now that the general economy is beginning to slowly improve, demand is outstripping supply.

This year is set to see the start of high-profile towers in central London such as British Land’s Cheesegrater and the Land Securities/Canary Wharf Group Walkie Talkie.

Industrial growth

The industrial sector is forecast by Glenigan to grow by 29 per cent this year, building on an increase of roughly half that magnitude in 2010. Improved business confidence and lending conditions are expected to promote industrial growth, particularly during the second half of 2011.

Civil engineering is expected to bounce back from a tough 2010 to grow by 17 per cent in 2011. This will be driven by investment in rail infrastructure with major London projects such as Crossrail and the Thameslink upgrade programme gathering pace alongside a multitude of smaller schemes.

Private sector infrastructure investment is also forecast to stay strong, with airports operator BAA pressing on with Heathrow upgrade plans.

Within the huge civils sector, however, there will be losers as well as winners. Roads starts are forecast to fall as the Highway’s Agency’s capital programme is scaled back dramatically over the next couple of years.

The value of private housing starts on site is forecast to grow by 11 per cent this year as consumer confidence begins to return. Glenigan believes this will overcome ongoing constraints on mortgage availability as the year progresses.

Retail is set to remain fairly flat in 2011, growing by 4 per cent according to the Glenigan forecasts. Supermarkets will remain a hot spot during 2011, while refurbishment of existing shops across the UK will increase as competition ramps up for consumer spending.

Public sector construction, unsurprisingly, is set for a torrid year as the new spending review period kicks in. Social housing is forecast to fall by 34 per cent, education by 27 per cent, health by 19 per cent, and community and amenity by 26 per cent.

The only private sector forecast to lose value in 2011 is hotel and leisure. This is largely due to the expected completion of the 2012 Olympics project halfway through the year. Work on the stadiums and surrounding hotels has propped up the sector through the last couple of years but this is now coming to an end leaving something of a void.


Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.