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Developers drawn to regional cities, crane survey suggests

31 Jan 17 UK regional cities appear to be reporting record levels of construction activity, with private developers piling in.

The latest reports in the Deloitte Real Estate Crane Survey series monitor construction activity in Birmingham, Manchester, Leeds and Belfast. According to the report authors, each city has seen a significant rise in development across a range of sectors including offices, flats, hotels, shops, education and student housing.

The Birmingham Crane Survey identifies 1.4 million sq ft of new office space under construction, up 50% increase since a year ago (969,000 sq ft). The surge signals the highest level of activity since this report was first published in 2002. Birmingham has also seen a 10-fold increase in residential schemes starting construction last year, totalling 2,331 units in the city centre.

Manchester city centre saw a record 22 residential projects breaking ground on site last year. This was eight more than the previous high of 14 in 2007 and is set to deliver nearly 7,000 units to the market. Four of these tower blocks, all now under construction, are more than 25 storeys high, changing the city skyline forever. This includes the UK’s tallest residential tower.

Leeds saw 20 major construction schemes complete in 2016, including the highest level of office space (more than 700,000 sq ft) delivered to market since 2007, and the city also recorded six new office starts in the Deloitte survey. Retail led the way in Leeds as the delivery of new shopping areas doubled the average annual total of retail space with nearly 600,000 sq ft brought forward in 2016. By contrast, city centre residential construction remains modest in Leeds with only three new residential schemes starting last year.

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Deloitte’s first Belfast Crane Survey recorded 19 schemes under construction and 11 schemes completing in 2016. This included four educational facilities, seven student accommodation projects, six office developments and eight hotels. Despite the changing face of Belfast, there is little new residential development going on in the city centre. Deloitte says that 84 residential units were completed in the city centre in 2016, and none are scheduled to come to the market this year.

Across the cities, the hotel sector is on the move. The Belfast Crane Survey recorded six new hotel projects under construction, delivering more than 1,000 new hotel rooms; Manchester has 1,040 hotel rooms under construction; Leeds saw more hotel construction starts than at any other time in the last decade, adding 385 rooms into the development pipeline.

Student accommodation is also an increasingly active sector. Belfast has almost 2,500 bed-spaces across seven major projects being built in the city centre area. This is in addition to the 413 bed-spaces that completed in 2016. Birmingham has more than 1,000 student bed-spaces coming forward to support its growing student population.

Simon Bedford, local government development partner at Deloitte Real Estate, said: “The results of our four crane surveys reflect the growth and resurgence in the regions, breaking records set more than a decade ago. Sentiment towards city centre development is buoyant with residential rising to new levels, quite literally in Manchester, with the addition of towers that will alter the city skyline. The unparalleled scale and volume of development in the regions prompted us to monitor a further city. Belfast’s development pipeline is in good shape and we expect to see even more cranes there in 2017. All sectors are active and we conclude that our regional cities are delivering growth and investment at levels not witnessed for many years.”

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