For the first time in almost five years the West Midlands construction industry is experiencing a “bounce back” on the scale of that previously only concentrated in the South West.
According to a new construction activity index, jointly compiled by Jones Lang LaSalle (JLL) and project intelligence provider Glenigan, the West Midlands saw a nine per cent rise in new activity during the second quarter of 2015 — a dramatic turnaround from the 9.2 per cent fall reported for the first three months of the year.
Construction project starts between April and June were up from £1.6m to £1.7m, largely due to the number of new-builds in the industrial and logistics markets.
This positive regional picture, says JLL, is reflected across the North West and Scotland, with increases of 16.8 and 17.6 per cent. The East of England topped the regional leader board with a 23 per cent rise in construction activity.
Nationally — and excluding the South East, traditionally a recovery leader — £3.2bn worth of new industrial schemes were underway in the year ending in June, a 12.8 per cent increase on the £2.8bn recorded at the close of the first quarter.
“We predicted the second quarter of 2015 would see a bounce back from the negative figures experienced towards the end of 2014 and the first three months of this year,” explained Graham Taylor (pictured), building consultancy lead director at JLL’s Birmingham office.
“It seems the major urban conurbations outside of London, such as Birmingham and Greater Manchester, are starting to gather pace.
“We know from our own experience that the industrial and logistics market has really heated up, with our team at the forefront of growth brokering over one-million square feet of space in the past nine months,” he added. “This is largely driven by a lack of supply in the region and an increased appetite for build-to-suit and speculative schemes.”
Taylor said the increase West Midlands activity was against a backdrop of slower national growth; with volumes rising by two per cent, but down from the remarkable seven per cent recorded over the first three months of the year.
This, he claimed, was possibly as a result of a slightly flatter London market; down 5.3 per cent, despite the capital still accounting for a quarter of all national construction activity.
“A surge in post-election business and investment decision-making was noticeable and we expect this to result in an increase in construction activity in late 2015 and throughout 2016,” Taylor concluded.
“We also expect markets to grow in line with stronger economic prospects over the coming years and, certainly up to 2018, there will be strong performances in regional cities such as Birmingham.”
