Project starts decreased compared to both the previous quarter and the previous year. Positively, main contract awards and detailed planning approvals increased year-on-year and quarter-on-quarter, bolstering the development pipeline.
Offices overview
Office work starting on site totalled £1.66bn during the three months to July, a 32 per cent decline compared with the preceding quarter, to stand 1 per cent down on the previous year. Major projects (£100m or more) decreased 55 per cent against the previous quarter but climbed 17 per cent on a year ago to total £603m. Underlying starts (less than £100m in value) fell 8 per cent against the preceding three months on a seasonally adjusted (SA) basis and were 9 per cent lower than a year ago, totalling £1.05bn.
Totalling £2.27bn, office main contract awards increased 1 per cent against the preceding three months to stand 34 per cent up on the previous year. Underlying office main contract awards fell 1 per cent (SA) on the preceding quarter to total £1.48bn, a 2 per cent decline compared to last year’s levels. Major project awards increased 5 per cent against the preceding quarter and more than doubled on last year to total £790m.
Office detailed planning approvals totalled £4.25bn, an 11 per cent increase against the preceding three months to stand 2 per cent up on a year ago. Major projects increased 20 per cent against the preceding three months to total £2.09bn, which was 3 per cent up on the previous year. Underlying approvals climbed 3 per cent (SA) against the previous quarter but slipped back 1 per cent compared with last year to total £2.15bn.
Size of office projects
Starts in the ‘Over £100m’ value band increased by 17 per cent year-on-year to £603m. Project starts in the ‘£50m to £100m’ value band grew by 32 per cent year-on-year, totalling £405m. The ‘£5m to £10m’ value band increased by 4 per cent year-on-year to £131m. In contrast, the ‘Up to £5m’ value band decreased by 12 per cent year-on-year to £176m. Starts in the ‘£20m to £50m’ value band fell by 34 per cent year-on-year, totalling £174m. Project starts in the ‘£10m to £20m’ value band declined by 37 per cent year-on-year to £166m.
Regional
London was the most active area of the UK for office starts, accounting for 57 per cent of the total value during the three months to July, thanks to the value having increased 11 per cent compared with the previous year’s levels. Office work starting in the Capital totalled £946m. The East of England also experienced 9 per cent growth on a year ago. The value of projects starting on site in the region added up to £266m, accounting for 16 per cent of the office sector. Growth in the region was boosted by the £189.9m Warner Bros Studios Expansion development in Watford.
At £165m, the North West also experienced a strong performance, with starts having grown 48 per cent on last year’s levels, to account for 10 per cent of the sector. Accounting for 3 per cent, Wales jumped 15 times on a year ago to total £45m. In contrast, accounting for a 7 per cent share, the South East decreased 11 per cent compared with last year’s levels, totalling £115m.
Scotland had the largest share of detailed planning approvals (22 per cent), with a total value of £907m, with the value having jumped almost 70 times on last year’s figures. The growth in the region was accelerated by the £850m Buchanan Galleries project in Glasgow. The South East grew 337 per cent to total £622m, a 15 per cent share of office consents.
Accounting for an 11 per cent share of approvals, the North East increased more than ten times on a year ago to total £459m. Accounting for the same share at £456m, the North West climbed 7 per cent against last year. In contrast, totalling £743m, London fell 62 per cent against the previous year to account for an 18 per cent share of consents.
