- Language: English
- 87 Pages
- Published: July 2011
- Region: United Kingdom
Commercial Office Construction Market - UK 2010-2014
- Published: November 2010
- Region: United Kingdom
- 74 pages
- AMA Research
The 2nd Edition of the report ‘Commercial Office Construction Market - UK 2010-2014’ provides a comprehensive review of the office construction and property market.
Key areas in the report:
- Continuing impact of economic downturn on developer activity in private commercial office sector.
- Detailed assessment of new build office construction output together with forecasts up to 2014.
- Demand, availability, take-up rates and rents - Central London office market and key regional markets in Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle upon Tyne and Nottingham.
- Office development pipeline for London and the regions through to 2013 - key commercial office schemes currently under construction.
Following a period of strong growth up to 2008, the commercial sector has experienced a tough period in 2009/10, but medium term prospects are more optimistic in the private sector, though the public sector will see some decline.
Areas of particular interest:
- Review of Coalition programme – impact on office construction - including radical shake up of planning system, devolving greater powers from Whitehall to local government, and removing regional governance.
- Review of sustainability agenda facing developers and clients in the office sector as driven by legislation and guidance such as the Energy Security and Green Economy bill.
- Gap between the Capital and the rest of the country - differences in trends, timing of recovery.
- Developments in both the corporate and public sectors.
- Future developments – key factors - fewer speculative developments, increasing popularity of pre-lets, move towards sustainability and low carbon buildings, emphasis on office refurbishment rather than new build – forecasts up to 2014.
- Impact of Comprehensive Spending Review in October 2010.
Major Companies profiled:
Abstract Land, Argent, Balfour Beatty Construction, BAM (Formerly HBG), Bovis, Bowmer & Kirkland Group, British Land, Byrne Group Plc, Carillion, Derwent London Plc, Development Securities, Frogmore, Gracemark, Great Portland Estates, Grosvenor, Hammerson, Heron International, Hines, Ibex Interiors, Interior Services Group (ISG), Interserve, ISG Group, Kier, Land Securities, Mace, MEPC, Miller Construction (UK) Ltd, Minerva, Morgan Sindall, Morris & Spottiswood, Peel, Quintain, Shepherd Construction, Sir Robert McAlpine, Skanska, St. Modwen, Stanhope, Terrace Hill Group, Wates Group, Willmott Dixon.
Key areas covered in the report:
THE COMMERCIAL OFFICE MARKET IN THE UK
- Performance of Commercial Office Market Sector 2009-10 including levels of take-up, occupiers by end-use sector, market supply and rental values.
- Analysis of Regional Office Markets – Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle upon Tyne, Nottingham.
- Analysis of the Central London Office Market – City, West End, Docklands.
- Performance of the UK Business Parks Sector.
- Office development in Regeneration areas.
- Impact of economic downturn on the commercial office market.
CONSTRUCTION MARKET FOR COMMERCIAL OFFICES
- Construction market overview – value of output for new work.
- Contractor’s output in the commercial office sector – public/private sector offices.
- Commercial offices – new development pipeline for the regions and Central London.
- Office refurbishment/fit-out market.
FACTORS AFFECTING THE COMMERCIAL OFFICE MARKET
- Planning issues – abolition of Regional Spatial Strategies.
- Establishment of Local Enterprise Partnerships.
- Planning issues in Central London.
- Sustainability and ‘Green Offices’ – Co2 emissions from office buildings; key environmental legislation, BREEAM Offices.
- Modern Methods of Construction (MMC) in commercial office sector.
- Comprehensive Spending Review -impact of public spending cuts on commercial office market, reduction in ‘Quangos’ and possible impact on office space.
CONSTRUCTION MARKET SUPPLY IN THE COMMERCIAL OFFICE MARKET
- Engineering and construction contractor capability in the commercial office market.
- Fit-out Contractors in the commercial office market.
- Leading Architectural Practices in the commercial office market.
- Leading Developers in the commercial office market.
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2. SUMMARY AND FUTURE PROSPECTS
3. THE COMMERCIAL OFFICE MARKET IN THE UK
3.1 PERFORMANCE OF THE COMMERCIAL OFFICE SECTOR
3.1.1 Take Up
3.1.2 Office Occupiers by End-use Sector
3.1.4 Rental Growth
3.2 REGIONAL OFFICE MARKETS
3.3 LONDON OFFICE MARKET
3.3.2 West End
3.4 BUSINESS PARKS IN THE UK
3.4.1 Performance of the Business Parks Sector
3.5 OFFICE DEVELOPMENT IN REGENERATION AREAS
3.6 IMPACT OF THE ECONOMIC DOWNTURN AND OUTLOOK FOR THE COMMERCIAL OFFICE MARKET
4. CONSTRUCTION MARKET FOR COMMERCIAL OFFICES
4.1 CONSTRUCTION MARKET OVERVIEW
4.2 CONTRACTORS OUTPUT IN THE COMMERCIAL OFFICE SECTOR
4.2.1 Outlook for Construction Activity in the Office Sector
4.3 COMMERCIAL OFFICES – NEW DEVELOPMENT PIPELINE
4.3.1 Central London Office Pipeline
4.3.2 Regional Office Pipeline
4.3.3 Office Refurbishment/Fit-out Market
5. FACTORS AFFECTING THE COMMERCIAL OFFICE MARKET
5.2 PLANNING ISSUES
5.2.1 Local Enterprise Partnerships
5.2.2 Planning Issues in London
5.3 SUSTAINABILITY AND ‘GREEN OFFICES’
5.3.1 Co2 Emissions from Office Buildings
5.3.2 Key Environmental Legislation
5.3.3 BREEAM Offices
5.3.4 Sustainability Issues for Commercial Offices
5.4 MODERN METHODS OF CONSTRUCTION IN THE COMMERCIAL OFFICE MARKET
5.5 PUBLIC SPENDING CUTS
6. CONSTRUCTION MARKET SUPPLY IN THE OFFICE SECTOR
6.2 ENGINEERING & CONSTRUCTION CONTRACTOR CAPABILITY IN THE OFFICE SECTOR
6.3 LEADING CONSTRUCTION CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR
6.4 FIT-OUT CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR
6.5 LEADING ARCHITECTURAL PRACTICES IN THE COMMERCIAL OFFICE SECTOR
6.6 LEADING DEVELOPERS IN THE COMMERCIAL OFFICE SECTOR
CHART 1: UK OFFICE DEVELOPMENT PIPELINE – CENTRAL LONDON / REGIONS - 2010 – 2013 (SQ. FT. M) 7
CHART 2: UK OFFICE MARKET – TAKE-UP LEVELS (SQ. FT. M) 2000 - 2010 12
CHART 3: UK OFFICE MARKET – TAKE-UP BY END SECTOR 2009 (%) 13
CHART 4: UK OFFICE MARKET – AVAILABILITY (SQ. FT. M) 2001 - 2010 14
CHART 5: UK OFFICE RENTS 2007 – 2012 (£ PER SQ. FT.) – KEY UK REGIONAL CENTRES 15
CHART 6: REGIONAL OFFICE MARKET – TAKE-UP LEVELS (SQ. FT. M) BY CITY 2009 17
CHART 7: LONDON CITY OFFICE MARKET – TAKE-UP LEVELS (SQ. FT. M) 2005 - 2010 24
CHART 8: CITY OF LONDON OFFICE MARKET – TAKE-UP BY END SECTOR Q2 2010 (%) 25
CHART 9: WEST END OFFICE MARKET – TAKE-UP LEVELS (SQ. FT. M) 2005 - 2010 26
CHART 10: WEST END LONDON OFFICE MARKET – TAKE-UP BY END SECTOR Q2 2010 (%) 27
CHART 11: DOCKLANDS OFFICE MARKET – TAKE-UP LEVELS (SQ. FT. ‘000) 2005 - 2010 28
TABLE 12: UK BUSINESS PARKS – TOTAL OFFICE SPACE BY REGION (SQ. FT. MILLION) 29
CHART 13: UK BUSINESS PARKS – SPACE UNDER CONSTRUCTION Q2 2010 (SQ. FT. ‘000) 30
TABLE 14: TOP COMMERCIAL-LED REGENERATION SCHEMES IN THE UK – CAPITAL VALUE, SIZE, MAIN DEVELOPER, COMPLETION 32
TABLE 15: UK CONSTRUCTION OUTPUT 2004 – Q2 2010 (£ BILLION AT CURRENT PRICES) 34
TABLE 16: CONTRACTORS OUTPUT IN THE COMMERCIAL OFFICE SECTOR 2004 – Q2 2010 (£ MILLION AT CURRENT PRICES) 36
CHART 17: FORECAST CONTRACTORS OUTPUT IN THE COMMERCIAL OFFICE SECTOR 2006 – 2014 BY VALUE (£ BILLION AT CURRENT PRICES) 37
CHART 18: CENTRAL LONDON OFFICE PIPELINE – CITY, MIDTOWN, WEST END - 2010 – 2013 (SQ. FT. M) 39
CHART 19: REGIONAL OFFICE DEVELOPMENT PIPELINE 2007 – 2013 (BY MILLION SQ. FT SPACE) 40
TABLE 20: CROSSRAIL LEVY – INDICATIVE CONTRIBUTIONS BY END USE SECTOR AND BY CONTRIBUTION AREA (£) (AS AT JULY 2010) 46
CHART 21: CARBON EMISSIONS FROM PROPERTY AND PROCESSES BY SECTOR 47
CHART 22: BREAKDOWN OF NON-DOMESTIC BUILDINGS’ EMISSIONS BY SECTOR 47
CHART 23: BREAKDOWN OF CARBON EMISSIONS BY END USE IN EACH SECTOR 48
CHART 24: PUBLIC SECTOR CAPITAL INVESTMENT - 2009-2016 (£BILLION) 55
TABLE 25: LEADING CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR – GROUP TURNOVER (£000) 58
TABLE 26: LEADING ARCHITECTS IN THE COMMERCIAL OFFICE MARKET 68
TABLE 27: LEADING DEVELOPERS IN THE COMMERCIAL OFFICE MARKET 71
Over the last two years, the commercial office market in the UK has experienced a significant downturn in activity and demand has reduced significantly. Take-up for 2009 was around 30% below average levels and totalled around 17m sq ft. The slowdown in activity has been most significant in the South, particularly south eastern, south western and eastern regions, where take-up has been down by as much as 40%. By contrast, the Midlands, Scotland and Northern regions have shown a greater resilience to the slowdown, with take-up levels down by between 4% and 20%.
Early-mid 2010 has seen some tentative signs of an upturn in the market, with the Central London office market leading the recovery, accounting for 62% of take-up activity in Q1 2010 – the highest quarterly take-up in five years. While this has been sustained into the middle of the year, it is too early to determine the impact of the CSR spending cuts on business confidence and new project development in the offices sector.
Despite economic difficulties, the financial and business services sector continued to perform relatively well and drive commercial office activity. This sector accounted for an estimated 23% of total take-up across the UK and around 46% of space transacted in the City of London where there is already evidence of an upturn in the market.
Public sector office demand has been a major driver behind office market take-up over the past decade, but with the recently announced cuts to public sector spending, demand in this sector is forecast to fall over the next year.
The Coalition Government's programme outlines a wide range of new measures that will influence and shape commercial development activity and impact on the property industry including the radical shake up of the planning system, centered on devolving greater powers from Whitehall to local government and removing regional governance.
However, the experience is not uniform across the country, with centres such as London indicating some upward movement in average rentals and increased demand for both new and refurbished office space. However, even in London it is likely to be another 12 months before any significant numbers of projects reach the construction stage.
Although the more positive performance for the private sector in Q1 2010 seemed to indicate a return to growth for the office sector, the decline in private commercial activity in Q2 2010 coupled with the ongoing spending cuts in the public sector both point to further decline in office output over the next three years. Forecasts indicate a decline in construction output values to around £7.3bn before expectations of growth 2013-14 push output value to around £7.8bn – though still 43% below pre-recession peak.
- Abstract Land
- Balfour Beatty Construction
- BAM (Formerly HBG)
- Bowmer & Kirkland Group
- British Land
- Byrne Group Plc
- Derwent London Plc
- Development Securities
- Great Portland Estates
- Heron International
- Ibex Interiors
- Interior Services Group (ISG)
- ISG Group
- Land Securities
- Miller Construction (UK) Ltd
- Morgan Sindall
- Morris & Spottiswood
- Shepherd Construction
- Sir Robert McAlpine
- St. Modwen
- Terrace Hill Group
- Wates Group
- Willmott Dixon