A recent dramatic rebound in new industrial building consents suggests construction activity in the sector is set to pick up over coming quarters, Glenigan is forecasting.
Whilst fears of a recession have weakened new project starts and contract awards in the opening months of this year, a recent dramatic rebound in industrial building consents suggests construction activity in the sector is set to pick up once confidence improves.
The future construction work pipeline in the industrial sector has received a major boost with a 35% increase in the value of underlying detailed planning approvals (on projects worth under £100 million) to £3,025 million in the three months to April, up by almost a fifth on the period last year.
The upturn appears to be centred on smaller and medium-sized warehouse/logistics projects while planning approvals for major industrial projects (over £100 million) have continued to fall.
The promising picture painted by Glenigan data also chimes with the message coming from agents in the sector. A ‘requirement index’ for industrial space produced by Savills suggests that demand has rebounded by up to 57% in the first quarter of this year, which the agent says suggests take-up of new space will start to rise in the second half of the year. Factors driving demand for space include companies’ need to boost the resilience of their supply chains, and energy supply, and to meet environmental goals.
Approvals rise in most regions
Most regions saw higher industrial planning approvals during February-April, but some areas look particularly well-placed to benefit from an upturn in the sector. Yorkshire and Humberside saw consents worth £567 million, double the value in the period a year earlier.
At one significant project in the region, Panattoni Doncaster 420 (pictured), detailed plans have been granted and work started in April on a £44.2 million storage & distribution building involving almost 39,000 sq m of industrial space (Project ID: 22133185).
Elsewhere in south Yorkshire, detailed plans have been granted and work is set to start later this summer on a £9.6 million industrial & business development at The Advanced Manufacturing Park, Rotherham (Project ID: 23042529).
Meanwhile, in the East of England, the value of planning approvals for new industrial space in the three months to April rose to £535 million, an almost three-fold increase compared to the period last year.
An £8.75 million scheme of four industrial/warehouse buildings for Legal & General Property Partners at Stevenage in Hertfordshire is one project in the region where detailed plans have been granted and tenders recently returned. Construction work is set to start in the autumn and run for eight months (Project ID: 21571990).
