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News Release


North West commercial construction dips

But inaugural JLL & Glenigan Construction Index charts the region as the most active outside London and the South East

MANCHESTER, 31 July 2014 – The volume of construction starts in the North West fell by 2.2 per cent in the first half of 2014 compared to the same period last year, though it remained the most active region in the UK outside of London and the South East.

This is according to the latest findings of a new report monitoring commercial development activity in the UK, produced by property consultant JLL and data provider Glenigan.

According to the JLL/Glenigan Construction Index, between January and June of this year a total of £2.4bn of new commercial construction projects got underway in the North West. This compared to £1.74bn in Yorkshire and £2.03bn in the West Midlands. 

London saw the highest growth of any region, jumping 27.2 per cent year on year to £5.46bn. The South East saw a dip of 11.6 per cent to £2.58bn, just ahead of the North West.

Of all the English regions outside of London, new activity fell by 6.3 per cent on average. 
Hotel construction was cited as being one of the biggest drivers for activity levels in Manchester, with the city experiencing one of the highest ratios of pipeline development to room supply at +12.8 per cent. 

JLL says that with one of the largest existing supplies of rooms in the UK regions (14,800) the Index’s findings suggest that demand for new hotel space will continue to grow. The consultant is predicting more new hotels to be under construction in the city during the second half of the year.  

In the office sector, Grade A vacancy rates in Manchester stand at less than two per cent and with occupier demand in the city growing JLL believes that more new development is inevitable over the next 12 months. 

Activity levels in the North West are still below pre-crisis levels. With UK GDP surpassing its 2008 peak and business investment reaching record levels, the consultant suggests that overall growth in new commercial construction is likely as the lag between recovery and new development coming forward shortens.

Commenting on the findings for the North West, Nick Currie, director, Building and Construction, at JLL in Manchester​, said: “I think it’s fair to say that we’re overdue a burst of activity in the offices sector, particularly in Manchester where Grade A space is severely limited.

“Alongside hotels, the retail sector is among the most active in the North West at the moment. Out-of-town retail and retail warehousing are busy areas in particular, with both new build and refit schemes continuing to come forward.  

“Conditions for contractors are tough at the moment, but not because of lack of work. As the market has lifted, materials prices have risen to record highs while a long and deep industry recession has depleted the supply of skilled labour.”