Concerns over the
impact on the construction industry of Britain leaving the EU without a deal
have inevitably been heightened as the March departure date looms.
But whilst business
confidence is fragile, there are signs that some key construction sectors could
prove resilient or even gain from a hard Brexit.
The prospect of
congestion at the ports – particularly Dover - and an end to ‘frictionless’
trade may create tender opportunities as UK ports invest more in upgrading and
enhancing their facilities. To date, Brexit has not deterred investment on the
quayside.
Last month ABP,
Britain’s largest port owner, unveiled proposals for Humber International
Enterprise Park; one of the largest port development sites in the UK covering
453 acres and which it hopes will attract major distribution and manufacturing
businesses.
Meanwhile, work got
underway earlier this year on a £32 million expansion at the Port of Felixstowe
(Glenigan Project ID: 17104784), which will significantly increase capacity at
what is the UK’s largest container port.
The weaker pound
ushered in by Brexit could also provide a further lift to the numbers of
tourists visiting the UK, giving a boost to hotel construction programmes. For
now, the pace of expansion at budget hotel chains shows little sign of slowing.
Having recently opened a 395-room hotel in the City, Travelodge is currently
investing £82 million in building projects involving four hotels in London.
Moreover, it is looking for a further 100 sites across London to open hotels,
which will create further tender opportunities.
New hotels capacity
is also being built in the regions. Glenigan Construction data shows a contract
has recently been signed on the £15 million Moxy Hotel in Manchester (pictured) with work
set to start on the 21 month project later this year (Glenigan Project ID: 16135782).
The prospect of
Britain leaving the EU customs union could also provide a spur to the domestic
industrial building/logistics sector, particularly as manufacturers and
retailers seek to maintain larger volumes of components and supplies closer to
home.
Although the
national picture is mixed, the demand for warehousing and logistics space is
continuing to expand in key manufacturing regions. The latest Glenigan
Construction data shows that the value of detailed planning approvals for
industrial projects in the seven months to July 2018 rose by 115% in the East
of England compared to the period last year and by 147 % in the North East. On
the same basis, industrial planning approvals were up by 84% in London, 77% in
the North West and 30% in the West Midlands.
These figures chime
with recent regional market surveys highlighting the potential in the
industrial construction sector. Around Peterborough for example, where Amazon,
Debenhams and Ikea all have major distribution centres, a recent Savills report
showed the vacancy rate for industrial space was running at a historic low of
just 2.2 per cent.
The industrial
development market looks particularly healthy around the Home Counties.
Glenigan Construction data shows work has recently started on a £7.6 million
scheme at Symmetry Park in Bicester (Glenigan Project ID: 18035400) where Db
Symmetry is building 14,200 sq m of warehouse space.
With its recent
results, Kier Group noted that the industrial sector remained buoyant with
strong occupier demand and robust investor sentiment. The firm’s property arm
has started work on new sites in Basingstoke and Reading and secured further
sites in Chelmsford, Gravesend, Solent and Maidenhead with construction due to
start over the coming year.
