Shortage of new development could hinder growth – JLL
RESEARCH from JLL and Glenigan has revealed that while construction is on an upward trend the development of commercial space is still lagging behind the UK’s growing economy.
Its inaugural Commercial Construction Index shows that construction had been underperforming as a component of GDP for some time, although in the first quarter of this year, output rose by 1.5%, ahead of the overall increase of 0.8%.
In the West Midlands, however, total construction starts in Q2 of 2014 were 15% down on Q2 2013 at £2.03bn.
Graham Taylor, director of JLL’s Birmingham buildings & construction team, said: “Despite positive overall trends in construction output, the volume of commercial space being started has not risen substantially since the recession and is still significantly behind the position before the crisis.
“Availability of finance is still the major issue.
“There is an urgent need for more office space, particularly in London and the major regional cities. Indeed, much of the shortfall in construction activity compared to the early to mid-2000’s is the result of the lack of activity in this sector.
“Cities such as Birmingham, Leeds and Manchester – as well as the ‘Greater South East’ – are already starting to see a shortage of grade A office space, and their revival could be affected if development does not gain pace.”
Refurbishments and extensions (£10.8bn), however, saw a slightly larger increase of 8.7%, which is perhaps unsurprising as these projects can be brought to market more quickly and with more certainty.
