Commercial Office Construction Market Report UK Analysis

Transcription

1 Commercial Office Construction Market Report UK Analysis Published: 03/08/2017 / Number of Pages: 85 / Price: Introduction and Overview The 5th edition of the 'Commercial Office Construction Market Report - UK Analysis' focuses on construction activity within the UK Commercial Office Market against a backdrop of continued economic uncertainty surrounding Brexit. Key issues covered in the report include: Analysis of construction output in the commercial office sector with forecasts to Structure and size of the UK Commercial Office sector in London and key regional cities including: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Southampton and Northern Powerhouse cities - Leeds, Liverpool, Manchester, Newcastle. Analysis of key drivers of office activity; take-up, availability / supply, prime office rents. Detailed review of major construction and fit-out contractors and architects involved in commercial office sector construction - overview of contractor capability and contract experience. Key developers and investors - overview of commercial office portfolios and development pipelines. Future prospects and opportunities for commercial office sector work for the construction supply chain. Areas of particular interest include: Analysis of the likely impact of Brexit on the commercial office market, particularly in London. Impact of large banks / financial institutions potentially relocating to other EU countries. A review of key issues affecting the commercial office market including: Planning Issues; the London Plan; PDRs; impact of Business Rates Revaluation; the impact of Transport Infrastructure schemes; environmental considerations; office construction costs; and modern methods of construction. Review of the office development pipeline for London and the regions, details the key commercial office schemes currently under construction and those in planning. In-depth analysis of the London Office Market, focusing on activity in the City, the West End, Docklands/East and key emerging office markets such as Kings Cross, Southbank, etc. Analysis of office development in Enterprise Zones and in the Tall Buildings Market. Key schemes in development.

2 Professional services and TMT sectors continue to dominate. Declining reliance on the banking and financial services sectors. Detailed market data and insight on the commercial office construction market by AMA Research, a leading UK provider of construction market intelligence. Some of the companies included: Abstract Securities, ADP, AHH Construction, AHR,Allies & Morrison, Argent, Arup, Aukett Swanke, Balfour Beatty, BAM, Barlow Interiors, Barnwood Interiors, BDP, Beck Interiors, Bowmer & Kirkland, 8Build, Bridgford Interiors, British Land, Broadway, Brookfield Properties, Buro Happold, BW Interiors, Byrne Group, Canary Wharf Contractors, Clark Contracts, Collins Construction, Como Interiors, Derwent London, 3D Reid, Eric Parry, Eric Wright Group, Faulkner Browns, Feilden Clegg Bradley, Foggo Associates, Frogmore, Galliford Try, Glenn Howells, Graham Interiors, Great Portland Estates, Grimshaw, Grosvenor, Havelock Europa, Heron International, Hines, HKR, HLM Architects, HOK, Hurst Group, Interserve, ISG, John Sisk, Kier, Kohn Pedersen Fox, Laing O'Rourke, Land Securities, Lend Lease, MACE, M&G Real Estate, MAKE Architects, Malyan, Maris Interiors, McLaren Construction, McLaughlin & Harvey, MEPC, Midas Construction, MITIE Interiors, Modus Group, Morgan Lovell, Morgan Sindall, Morris & Spottiswood, Multiplex, NG Bailey, Norr Architects, Overbury, Paragon Interiors, Parkeray, Patton Fit-out, Peel, PLP Architecture, Portview, Railston, RG Carter, Robertson Construction, Royal Institute of British Architects (RIBA), Russells Construction, Scott Brownrigg, Seddon Group, Sharkey, Sheppard Robson, Simons Construction, SimpsonHaugh & Partners, Simpson (York), Skanska, SOM, Speller Metcalfe, Stanhope, St. Modwen, Stride Treglown, Structuretone, Styles & Wood, Swanke Hayden Connell, U&I, Urban & Civic, Vinci, Wates Interiors, Willmott Dixon, Woods Bagot, Construction Market for Commercial Offices in the UK Total Construction New Work Output with forecasts to Non-Residential Construction Output by Sector in 2016 and Outlook between 2017 and Construction Output in the Offices Sector and Forecasts for Output to Commercial Offices - New Development Pipeline for Central London and the Regions. London Office Market -Emerging Areas of Development. Office Refurbishment/Fit out Market. Construction Market Supply in the Commercial Office Sector Key Construction & Fit-out Contractors in the Commercial Office Sector - overview of capability and contract experience. Key Architects in the Commercial Office Sector - overview of capability and contract experience. Commercial Office Developers and Investors. The Commercial Office Market in the UK Performance of the Commercial Office Sector in Key drivers of office activity - Take-up, Office Occupiers by End Use Sector, Supply/Availability, Key Office Rents. Regional Office Markets: Activity in Key UK Cities - Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Southampton. London Office Market - City/West End/Docklands and East. Key emerging areas of development. Commercial Offices - Tall Buildings Market in the UK.

3 Enterprise Zones - Commercial Office Development in the UK. Outlook for the Commercial Office Market. Factors Affecting the Commercial Office Market Planning Issues - Localism, National Planning Policy, Local Enterprise Partnerships and Enterprise Zones. Planning Issues in London - The London Plan and Office Development, Mayoral Infrastructure Levy. Impact of Permitted Development Rights on Office Market - Conversion of Offices to other uses. Sustainability and Green Offices - Carbon Emissions from Office Buildings, Key Environmental Legislation affecting Office Design, BREEAM Offices. Modern Methods of Construction (MMC) in the Commercial Office Market. Commercial Offices - Construction Costs. Impact of Transport Projects - Key Transport/Infrastructure projects in London & the Regions. Economic & Political Drivers - Impact of Brexit on the Commercial Office Market; Business Rates Revaluation Report Summary In 2016, contractors' output in commercial office new build market is thought to have increased by 17% compared with During 2016, the UK commercial office market experienced considerable fluctuations linked to political uncertainty and decreased consumer and investor confidence surrounding Brexit. However, despite this, the market experienced strong levels of leasing activity in key regional office markets and sustained rental growth due to the limited availability of Grade-A space in cities like Birmingham, Bristol, Leeds, Manchester, London, Cardiff, Edinburgh, and Glasgow. A key driver of office output growth is the level of speculative office building which began to experience growth in 2013 and continues to be driven by strong rental growth, low vacancy rates and an increase in pre-letting activity in However, this surge in speculative development is likely to see a slowdown after 2017 and the stalling or cancellation of some projects, particularly in the capital, as demand is re-assessed in the light of economic uncertainty making speculative development less attractive to developers. A key issue which is likely to challenge the rental market in London will be the impact of business rates revaluation on the market in 2017, meaning that rates on prime space in the Central London commercial office market are set to experience significant above-inflation increases. The introduction of Permitted Development Rights has resulted in a significant level of proposals for conversion of secondary office buildings to residential use, and this has removed a considerable proportion of secondary office stock from the commercial office market leading to further constrained supply in many areas. Forecast growth for commercial office construction is slower over the forecast period, with output levels expected to decline between 2017 and 2019 as business and consumer confidence are affected by economic uncertainty surrounding Brexit, before recovering again. The medium-term outlook for the offices sector is heavily reliant on the continued importance of London as a commercial and financial centre. However, increasing development in other UK cities is forecast to increase, with the Government a key client stimulating increased activity across the regions during List of Contents Contents Listing 1. INTRODUCTION 7

4 1.1 BACKGROUND SOURCES OF INFORMATION 7 2. SUMMARY AND FUTURE PROSPECTS SUMMARY MARKET PROSPECTS ECONOMIC ENVIRONMENT GDP INFLATION & INTEREST RATES UNEMPLOYMENT HOUSEHOLD CONSUMPTION HOUSING & CONSTRUCTION STERLING POPULATION PROFILE CONCLUSIONS COMMERCIAL OFFICE CONSTRUCTION MARKET TOTAL CONSTRUCTION OUTPUT CONSTRUCTION OUTPUT IN THE COMMERCIAL OFFICES SECTOR New Work Office Refurbishment/Fit out Market MARKET INFLUENCES Office Development Pipeline Planning Issues Sustainability and 'Green' Offices Modern Methods of Construction (MMC) in the Commercial Office Market Construction Costs Impact of Transport Projects on the Commercial Office Market 43

5 4.3.7 Economic and Political Drivers Tall Buildings Local Enterprise Partnerships & Enterprise Zones THE COMMERCIAL OFFICE MARKET IN THE UK PERFORMANCE OF THE COMMERCIAL OFFICE SECTOR Take-up Office Occupiers by End-use Sector Supply Rental Growth LONDON OFFICE MARKET City West End Docklands REGIONAL OFFICE MARKETS Birmingham Bristol Cardiff Edinburgh Glasgow Leeds Liverpool Manchester Newcastle Southampton CONSTRUCTION MARKET SUPPLY - OFFICE SECTOR OVERVIEW 72

6 6.2 LEADING CONSTRUCTION CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR FIT-OUT CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR LEADING ARCHITECTURAL PRACTICES IN THE COMMERCIAL OFFICE SECTOR LEADING DEVELOPERS IN THE COMMERCIAL OFFICE SECTOR 83 Tables & Charts CHART 1: CONTRACTORS' OUTPUT IN THE OFFICES SECTOR BY VALUE ( M) 9 TABLE 2: GDP DATA KEY CONSTITUENT ELEMENTS 14 CHART 3: INTEREST RATES AND INFLATION (CPI) FROM CHART 4: PDI & SAVINGS RATIO AT CURRENT PRICES TABLE 5: EXCHANGE RATE FLUCTUATIONS STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 19 CHART 6: VALUE OF TOTAL CONSTRUCTION OUTPUT BY VALUE ( BN AT CURRENT PRICES) 21 CHART 7: VALUE OF NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE TABLE 8: CONTRACTOR'S OUTPUT IN THE OFFICES SECTOR (PUBLIC & PRIVATE) ( M) 25 CHART 9: LONDON OFFICE DEVELOPMENT PIPELINE: TOTAL DEVELOPMENT SPACE ANTICIPATED (SQ. FT. M) 28 CHART 10: LONDON OFFICE DEVELOPMENT PIPELINE: CITY, WEST END AND DOCKLANDS: (SQ. FT. M) 29 TABLE 11: LONDON OFFICE MARKET: KEY SCHEMES IN DEVELOPMENT - SIZE, MAIN DEVELOPER, COMPLETION DATE 31 CHART 12: REGIONAL OFFICE DEVELOPMENT PIPELINE: TOTAL/SPECULATIVE DEVELOPMENT SPACE ANTICIPATED (SQ. FT. M) BY CITY/REGION 32 TABLE 13: LONDON OFFICE MARKET: KEY SCHEMES IN DEVELOPMENT - SIZE, MAIN DEVELOPER, COMPLETION DATE 34 TABLE 14: LONDON PLAN - DEMAND FOR OFFICE-BASED EMPLOYMENT AND FLOOR-SPACE TABLE 15: CROSSRAIL LEVY - INDICATIVE CONTRIBUTIONS BY END USE SECTOR AND BY CONTRIBUTION AREA ( ) 37 TABLE 16: BREAKDOWN OF NON-DOMESTIC BUILDINGS' EMISSIONS BY SECTOR 38 TABLE 17: COMMERCIAL OFFICE CONSTRUCTION COSTS ( /SQ. M. GIA) 43 TABLE 18: TOP HIGH-RISE OFFICE SCHEMES IN THE UK PIPELINE 49 TABLE 19: ENTERPRISE ZONES - KEY COMMERCIAL OFFICE DEVELOPMENTS 52 CHART 20: UK OFFICE MARKET - TOTAL TAKE-UP LEVELS: (SQ. FT. M) 55

7 TABLE 21: UK OFFICE MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 56 CHART 22: UK OFFICE MARKET - AVAILABILITY: (SQ. FT. M) 57 TABLE 23: UK OFFICE RENTS IN KEY REGIONAL CITIES ( /SQ. FT.) 58 CHART 24: CITY OFFICE MARKET - TOTAL TAKE-UP LEVELS: (SQ. FT. M) 60 TABLE 25: CITY OFFICE MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 60 TABLE 26: CITY OFFICE PRIME RENTS: ( /SQ. FT.) 61 CHART 27: WEST END OFFICE MARKET - TOTAL TAKE-UP LEVELS: (SQ. FT. M) 62 TABLE 28: WEST END MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 62 TABLE 29: WEST END PRIME RENTS: ( /SQ. FT.) 63 CHART 30: DOCKLANDS OFFICE MARKET - TOTAL TAKE-UP LEVELS: (SQ. FT. M) 64 TABLE 31: DOCKLANDS MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 64 TABLE 32: DOCKLANDS PRIME RENTS: ( /SQ. FT.) 65 CHART 33: REGIONAL OFFICE MARKET - TAKE-UP LEVELS ('000 SQ. FT) BY CITY TABLE 34: TOP CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR: KEY PROJECTS IN 2016/17 AND PREVIOUS EXPERIENCE 73 TABLE 35: TOP SPECIALIST FIT-OUT/INTERIOR REFURBISHMENT COMPANIES BY ACTIVITY AND TURNOVER ( M) 78 The 'Commercial Office Construction Market Report - UK Analysis' costs 845+VAT (if applicable) for a PDF version. Other formats are available - click here for a information about available report formats. All AMA reports are sold with a single user licence as standard. For more information about AMA licences click here. About AMA Research Established in 1989, AMA Research is widely recognised as the leading specialist provider of market research to the UK building and construction industries. AMA s research and analysis goes beyond the more commonly available range of statistical and company information to provide expert, informed commentary and in-depth market analysis, making the reports a valuable and relevant resource for understanding the UK s construction and associated markets. We offer the following:

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