Investment across construction sectors improving NW region’s outlook
Investment across all sectors of the construction industry has been reported in the latest Construction Market Intelligence (CMI) report by North West property and construction management consultant, Rider Levett Bucknall.
In its latest CMI report for the first quarter of 2024, RLB reflects that, despite difficult economic conditions, Manchester remains a favoured city for private residential development and commercial developments, and the Liverpool City Region is seeing a marked increase in affordable housing projects as well as the region continuing to benefit from Levelling Up Fund allocations.
The report also highlights that the North West is proving attractive to emerging industries such as life sciences, advanced manufacturing, materials research and hydrogen generation and the RLB team anticipates continuing growth in demand for sustainable buildings and infrastructure.
Strong partnerships between the public and private sectors will be key to unlocking the significant potential the region has to offer in these areas. While projects were slow to get off the ground in previous quarters, there are now signs that developers are more willing to progress projects and there are signs of a slow increase in bidding opportunities coming to market, suggesting a more optimistic outlook.
Prices in the region have cooled as tenders become more competitive, and the outlook suggests continued cooling of inflationary costs in the overall construction sector, which is already evident in contractors’ pricing of projects in the first quarter of the year.
Contractors are willing to competitively tender projects on fixed prices, and risk margins appear to be removed or greatly reduced.
A possible change of government in 2024 may impact on public spending on projects going forward, which, in turn, will likely affect tendering contractors’ views of the market and their pricing.
While materials prices have levelled with steelwork pricing back to Q1 2022 levels, MEP contractors’ costs are still significantly higher than those of other trades and there is an expectation of steady wage increases throughout 2024, but not to the extent of last year.
With the new £760m Everton FC stadium on Bramley-Moore Dock now into its final year of construction and redevelopment and extension plans mooted for both Manchester City and Manchester United, the stadia sector remains key to the economic impact on the region.
As does the data centre sector with two new projects including a new build 7.5MW facility for UKRI and a planned 15.6MW data centre in Manchester and the UKRI project, that is currently on site, due to complete in the fourth quarter of 2024.
There is also a lot of activity in the Energy Centre North West, though with most of it at early stages, and there is a hydrogen facility in Wirral in planning as well as early stages of new nuclear fuel facilities in Preston.
The RLB team is also delivering a district heating network in Liverpool, with potential of further networks in Manchester and Birkenhead.
There is also increased activity in the logistics and manufacturing sector, with clients looking at more projects, which are more end user-led than developer-led.
Steve Gillingham, Managing Partner for RLB North West, said: “There are signs that developers are more willing to progress projects than in 2023, with a slow increase in bidding opportunities coming to market.
“Contractors are willing to competitively tender projects on fixed prices and risk margins appear to be reduced, or removed, suggesting a return to more viability and stability.
“There are upticks in many of the sectors with existing work continuing and/or new projects planned including the data centre, energy and logistics and manufacturing, residential, stadia and educational sectors that will drive the continued growth in demand for sustainability buildings and infrastructure in the region.”