Commercial construction in the UK is witnessing a resurgence after a turbulent period marked by the COVID-19 pandemic and other major global events that significantly impacted the construction industry.
The Office for National Statistics’ comparison of commercial construction in 2020 and 2021 makes for interesting reading, and highlights that despite the steadying seen across the industry in 2021, its output was still below 2019 levels.
According to the data, the total new work grew by 15.3% in 2021, however annual construction output was still below the 2019 levels and private commercial new work had a negative output growth of 4.2%, although this sector had fallen from 21.3% from 2019 to 2020 so the decline had slowed.
The industry’s ability to weather the storm and exhibit a stabilising trend in 2021 was certainly an encouraging sign, preempting a gradual return to pre-pandemic levels of activity and output across the sector.
According to Glenigan, the total value of detailed planning permission granted to office work in the first three months of 2023 has doubled compared to the same period last year to £3.5 billion. Compared with the last quarter of 2022, this represents a massive jump of 69%.
This significant upswing in the commercial construction industry can be largely attributed to the surge in high-value development projects across various sectors including retail parks, commercial office units and television studios. The investment and focus on these high-value ventures underscore the confidence and commitment of developers and businesses in expanding their operations and creating innovative spaces that cater to the evolving needs of consumers and industries alike.
The growth in the commercial construction sector is not solely driven by large-scale projects, however. Smaller value projects, those valued at less than £100 million, have also played a pivotal role in bolstering the overall growth of the industry. In fact, this category of projects has witnessed an impressive growth rate of 35%, amounting to a cumulative value of £1.5 billion, when compared with the final quarter of 2022. This surge in smaller value projects is even more remarkable when considering the astounding 67% increase recorded over the first quarter of 2022.
These projects, though individually smaller in scale, collectively contribute significantly to the industry’s growth and vitality, stimulating economic activity and generating employment opportunities in local communities.
The growth in smaller value projects is likely propelled in part by regional development initiatives and urban regeneration efforts. Local authorities are increasingly recognising the importance of rejuvenating underutilised areas and are aiming to stimulate economic growth, attract investments and improve the overall liveability of communities. Smaller value projects are instrumental in this regard, as they can be more feasible and practical in revitalising smaller pockets of land or repurposing existing structures, breathing new life into urban areas and contributing to the overall urban landscape.
The promising rise in the commercial construction industry can be attributed to a multifaceted combination of factors, with one key driver being the slowed fall in commercial property value. This shift in the property market has prompted developers and businesses to seize the opportunity and accelerate their construction activities, pushing forward with projects that were previously on hold or delayed due to uncertain market conditions.
The slowed fall in commercial property value has instilled a renewed sense of confidence and stability within the industry, encouraging developers to invest in new projects and capitalise on more favourable market conditions.
Antony Antoniou, the CEO of Robert Irving Burns, a commercial real estate firm in London, UK, states that “it does feel like we’re nearing the floor”, referring to their forecasted drop of 1.3% in sales price per square foot between the first two quarters of 2023.
As the commercial construction industry experiences a positive upturn, the demand for quality building materials rises in tandem.
Polymer flooring, known for its durability, versatility and aesthetic appeal, is an excellent choice for many commercial projects and the growth in the construction industry represents a positive opportunity for the resin flooring industry, as more developers and businesses seek reliable and long-lasting flooring options.