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Commercial Office Construction Market Report - UK 2015-2019 Analysis

Published: 16/04/2015 / Number of Pages: 93 / Price: £795.00

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Introduction and Overview

AMA Research have published the 4th edition of the report 'Commercial Office Construction Market Report - UK 2015-2019 Analysis', which provides a comprehensive review of the office construction and property market.

Key areas covered:

  • Review of the UK commercial offices market - take-up rates, occupier category shares, market supply and demand, rental values, significant business parks.
  • Office construction activity - new build office construction output and forecasts to 2019, contractor activity, significant end-use sectors and key trends.
  • Regional analysis - regional office market performance and office development pipeline data for key UK cities; Central London, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle-upon-Tyne and Nottingham.
  • Key factors influencing office construction - planning issues, Local Enterprise Partnerships, conversion of offices, sustainability and 'green offices', construction costs etc.
  • Key players in the offices sector - contractors, developers and architects/consultants.

Office construction has experienced a good recovery in the last 2 years and the report focuses on renewed growth in the sector over the last 18 months, which has resulted in a resumption of speculative development across London and many regional cities.

Key areas of insight include:

  • Total take-up for 2014 was estimated to be the highest since 2007, highlighting a return to growth for the office market as a whole.
  • Continued shortage of office space is likely to drive continued opportunities over the next 3-4 years for high quality refurbishment projects.
  • Impact of Permitted Development Rights has resulted in an increase in proposals for conversion of secondary office buildings to uses such as residential, hotel or student accommodation - major impact on availability of second-hand space.
  • Financial services and banking sectors have seen a recent resurgence and increase in demand for space after being the worst affected sectors during the economic downturn. The TMT sector is also driving growth in both the regional and central London markets.
  • Regional development pipeline in many cities is now more positive with around 6.9m sq. ft. of speculative space to be completed by 2018 - double the annual average supply since the downturn in 2010.
  • The outlook over the next 4 years to 2019 remains buoyant for the commercial office market.
  • Detailed market data and insight on the commercial office construction market by AMA Research, a leading UK provider of construction market intelligence.

Some of the companies included:

Balfour Beatty, BAM, Brookfield Multiplex, Byrne Group, Carillion, Como Interiors, Ellmer, Galliford Try, Havelock Europa, Ibex Interiors, Interserve, ISG, Kier, Laing O'Rourke, LendLease, Mace, Morgan Sindall, Morris & Spottiswood, Overbury, Patton Fit-Out, Sir Robert McAlpine, Skanska, Styles & Wood, VINCI, Wates Interiors, Willmott Dixon.

The Commercial Office Market in the UK

  • Performance of the Commercial Office Market Sector 2013-14 including levels of take-up, occupiers % share by end-use sector (Banking, Bus.services, Prof.services etc), market supply / availability and rental values.
  • Regional Office Markets - Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle upon Tyne, Nottingham - take-up levels 2014, review of recent/forecast developments by centre, rents, recent supply, pipelines (sq.ft.)etc.
  • Analysis of Central London office market - City, West End, Docklands - take-up levels 2007-14, rents, share by end-use markets etc.
  • UK Business Parks Sector - take-up levels 2007-14 sq ft, recent trends, drivers etc.
  • Office development in Regeneration areas - key schemes - Kings Cross, Media City, Clyde Gateway, Swindon, Slough etc - size, capital values, main developer, dates etc.

Construction Market for Commercial Offices

  • Construction market overview - value of output for new work 2009-2019 - output by sector (offices, retail, education, health etc).
  • Construction output for 2015 and beyond.
  • Contractors output in the commercial office sector - 2009-2019 - trends in public/private sector offices, impact of economy.
  • 25 leading office schemes - London/Regions - Planning Status, Size, Main Developer, Completion dates.
  • Office development pipeline - Central London 2015-2018 - key schemes - Broadgate, Bloomberg Place, London Wall Place etc. - size, status developers etc.
  • Office development pipeline - Regions - overview of major schemes - as above.
  • Office refurbishment/fit-out market.

Key Influencing Factors

  • Planning issues - assessment of Local Enterprise Partnerships.
  • Planning issues in Central London - The London Plan (Floor Space Sq.ft by London Area); Crossrail Levy; Community Infrastructure Levy, Conversions etc.
  • Conversion of Offices (B1 Class) to Residential Units (C3 Class).
  • Sustainability and 'Green Offices' - Co2 emissions from office buildings (heating, lighting etc); key environmental legislation, BREEAM Offices; Green Retrofitting Scheme; RE:FIT London. Impact of transport schemes (Crossrail, HS2, Northern Line etc).
  • Construction Costs - Premium/Grade A - London/Regions.

Key Players in the Sector

  • Engineering and construction contractor capability in the commercial office market -top contractors by projects won..
  • Top 20 Fit-out Contractors in office market - turnover/market positioning etc.
  • Leading 25 Architectural Practices in office market. - top players, profiles, fee incomes, key schemes etc.
  • Leading 20 Developers - top players, profiles, key schemes.

Report Summary

During 2014 the recovery in the UK commercial office market continued, as both business and consumer confidence began to return. Demand has increased across the majority of key regional cities, representing a significant growth in take-up and falling supply, and office rents are now also returning to growth.

As a result of improved market conditions, total take-up for 2014 was estimated to be the highest since 2007 and highlights a return to growth for the office market as a whole. The majority of take-up in 2014 was for grade-B space, reflecting the very limited supply of grade-A stock available. In addition, a sustained recovery in the central London office market in 2014 saw take-up at its highest annual rate since 2001 and all London markets have seen increased occupier demand over the last 12 months; the City saw particularly high levels of take-up, driven by a resurgence in demand from the financial sector, which saw significant growth in 2014. The TMT sector also continued to help drive London take-up.

In terms of construction output, the last 18 months or so has seen renewed demand intensifying across the UK office market, leading to output rising by and an estimated 13% in 2014. Going forward, prospects for office construction output are on the rise, with London and the South East leading the recovery. Offices are expected to drive commercial output growth in 2015 and beyond and, given, the nationwide strength in demand, it is expected that output in the commercial offices market will continue to grow by between 6% and 8% over the next few years. Demand for office RMI is expected to remain strong to 2019, with growth rates of around 3-4%.

In terms of opportunities for the construction market, the resurgence of speculative office development, together with a notable increase in office refurbishments is driving work for contractors operating in the commercial offices sector. Traditionally office fit out and refurbishment work has been dominated by specialist firms but this is changing with a number of larger contractors taking advantage of the increase in office refurbishment work. The outlook over the next 4 years to 2019 remains buoyant for the commercial office market driven by an acute lack of existing stock across many cities, increased demand for space from occupiers and a significant number of lease expiries due over the next few years, which will further fuel demand.


List of Report Contents

  1. Contents Listing
  2. 1. INTRODUCTION 7
  3. 2. SUMMARY AND FUTURE PROSPECTS 8
  4. 3. THE COMMERCIAL OFFICE MARKET IN THE UK 13
  5. 3.1 PERFORMANCE OF THE COMMERCIAL OFFICE SECTOR 13
  6. 3.1.1 Take-Up 14
  7. 3.1.2 Office Occupiers by End-use Sector 15
  8. 3.1.3 Supply 16
  9. 3.1.4 Rental Growth 17
  10. 3.2 REGIONAL OFFICE MARKETS 19
  11. 3.2.1 Birmingham 20
  12. 3.2.2 Bristol 21
  13. 3.2.3 Cardiff 22
  14. 3.2.4 Edinburgh 22
  15. 3.2.5 Glasgow 23
  16. 3.2.6 Leeds 24
  17. 3.2.7 Liverpool 24
  18. 3.2.8 Manchester 25
  19. 3.2.9 Newcastle 25
  20. 3.2.10 Nottingham 26
  21. 3.3 LONDON OFFICE MARKET 26
  22. 3.3.1 City 27
  23. 3.3.2 West End 30
  24. 3.3.3 Docklands 33
  25. 3.4 BUSINESS PARKS IN THE UK 35
  26. 3.4.1 Performance of the UK Business Parks Sector 36
  27. 3.5 OFFICE DEVELOPMENT IN REGENERATION AREAS 38
  28. 3.6 OUTLOOK FOR THE COMMERCIAL OFFICE MARKET 41
  29. 4. CONSTRUCTION MARKET FOR COMMERCIAL OFFICES 43
  30. 4.1 CONSTRUCTION MARKET OVERVIEW 43
  31. 4.1.1 Construction New Work - Value of Non-Domestic Output to 2019 43
  32. 4.1.2 Output by Sector 44
  33. 4.2 CONTRACTORS OUTPUT IN THE COMMERCIAL OFFICE SECTOR 47
  34. 4.3 COMMERCIAL OFFICES - NEW DEVELOPMENT PIPELINE 49
  35. 4.3.1 Central London Office Pipeline 49
  36. 4.3.2 Regional Office Pipeline 52
  37. 4.3.3 Office Refurbishment/Fit-out Market 55
  38. 5. FACTORS AFFECTING THE COMMERCIAL OFFICE MARKET 56
  39. 5.1 PLANNING ISSUES 56
  40. 5.1.1 Local Enterprise Partnerships 56
  41. 5.1.2 Planning Issues in London 58
  42. 5.1.3 Conversion of Offices to Other Use 60
  43. 5.2 PRE-LETTING ACTIVITY 61
  44. 5.3 SUSTAINABILITY AND 'GREEN' OFFICES 62
  45. 5.3.1 Co2 Emissions from Office Buildings 62
  46. 5.3.2 Key Environmental Legislation Affecting Offices 64
  47. 5.3.3 BREEAM Offices 67
  48. 5.3.4 Sustainability Issues for Commercial Offices 69
  49. 5.4 MODERN METHODS OF CONSTRUCTION IN THE COMMERCIAL OFFICE MARKET 70
  50. 5.5 CONSTRUCTION COSTS 71
  51. 5.6 IMPACT OF TRANSPORT PROJECTS ON THE COMMERCIAL OFFICE MARKET 73
  52. 5.6.1 Transport Developments in London 73
  53. 5.6.2 Transport Developments across the Regions 75
  54. 6. CONSTRUCTION MARKET SUPPLY - OFFICE SECTOR 77
  55. 6.1 OVERVIEW 77
  56. 6.2 LEADING CONSTRUCTION CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR 77
  57. 6.3 FIT-OUT CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR 81
  58. 6.4 LEADING ARCHITECTURAL PRACTICES IN THE COMMERCIAL OFFICE SECTOR 87
  59. 6.5 LEADING DEVELOPERS IN THE COMMERCIAL OFFICE SECTOR 91
  1. Tables & Charts
  2. TABLE 1 UK OFFICE MARKET - REGIONAL SUMMARY DATA BY CITY - TAKE-UP, SUPPLY, RENTS, PIPELINES - 2014 (FIGURES ROUNDED) 8
  3. CHART 2 UK OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) 2004 - 2014 14
  4. CHART 3 UK OFFICE MARKET - TAKE-UP BY END SECTOR 2014 (%) - TMT, BUSINESS SERVICES, BANKING & FINANCIAL, PROFESSIONAL SERV., PUBLIC SECTOR. 16
  5. CHART 4 UK OFFICE MARKET - AVAILABILITY (SQ. FT. M) 2004 - 2014 17
  6. CHART 5 UK OFFICE RENTS 2013 - 2019 (£ PER SQ. FT.) - KEY UK REGIONAL CENTRES 18
  7. CHART 6 REGIONAL OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) BY CITY 2014 20
  8. CHART 7 LONDON CITY OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) 2007 - 2014 28
  9. CHART 8 CITY OFFICE PRIME RENTS 2004 - 2014 (£ PER SQ. FT.) 29
  10. CHART 9 CITY OF LONDON OFFICE MARKET - TAKE-UP BY END SECTOR 2014 (%) 30
  11. CHART 10 WEST END OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) 2007 - 2014 31
  12. CHART 11 WEST END OFFICE PRIME RENTS 2004 - 2014 (£ PER SQ. FT.) 32
  13. CHART 12 WEST END OFFICE MARKET - TAKE-UP BY END SECTOR 2014 (%) 32
  14. CHART 13 DOCKLANDS OFFICE MARKET - TAKE-UP LEVELS (SQ. FT. M) 2007 - 2014 33
  15. CHART 14 DOCKLANDS OFFICE PRIME RENTS 2004- 2014 (£ PER SQ. FT.) 34
  16. CHART 15 WEST END OFFICE MARKET - TAKE-UP BY END SECTOR 2014 (%) 35
  17. CHART 16 UK BUSINESS PARKS - TAKE-UP 2007-2014 (SQ. FT. MILLIONS) 37
  18. TABLE 17 TOP COMMERCIAL-LED REGENERATION SCHEMES IN THE UK - CAPITAL VALUE, SIZE, MAIN DEVELOPER, COMPLETION 41
  19. CHART 18 VALUE OF NON-DOMESTIC CONSTRUCTION OUTPUT 2009 - 2019 BY VALUE (£BN AT CURRENT PRICES) 43
  20. CHART 19 VALUE OF CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2014 44
  21. TABLE 20 VALUE OF CONTRACTORS OUTPUT IN THE OFFICE SECTOR 2009-2019 (£M) 48
  22. CHART 21 LONDON OFFICE DEVELOPMENT PIPELINE - CITY, WEST END & DOCKLANDS: 2015 - 2018 (SQ. FT. M) 50
  23. CHART 22 LONDON OFFICE MARKET - PROPOSED/UNDER CONSTRUCTION DEVELOPMENTS 2015-2017 51
  24. TABLE 23 TOP 25 COMMERCIAL OFFICE SCHEMES IN DEVELOPMENT - CAPITAL VALUE, SIZE, MAIN DEVELOPER, COMPLETION 54
  25. TABLE 24 THE LONDON PLAN - ANTICIPATED DISTRIBUTION OF OFFICE FLOOR-SPACE BY LONDON AREA: 2011-2036 (% OF FLOOR-SPACE) 59
  26. TABLE 25 CROSSRAIL LEVY - INDICATIVE CONTRIBUTIONS BY END USE SECTOR (OFFICE, RETAIL, HOTELS) AND BY CONTRIBUTION AREA (£) 60
  27. CHART 26 BREAKDOWN OF NON-DOMESTIC BUILDINGS' EMISSIONS BY SECTOR 63
  28. CHART 27 BREAKDOWN OF CARBON EMISSIONS BY END USE (HEATING, LIGHTING, COOLING, CATERING, OFFICE EQUIPMENT ETC) IN EACH SECTOR 64
  29. TABLE 28 COMMERCIAL OFFICE CONSTRUCTION COSTS - 2014 (£/ SQ. M. GIA) 72
  30. TABLE 29 COMMERCIAL OFFICE SECTOR ANALYSIS - TOP CONTRACTORS BY PROJECTS WON (£M) 2014-2015 AND PREVIOUS OFFICE EXPERIENCE 78
  31. TABLE 30 TOP SPECIALIST FIT-OUT/INTERIOR REFURBISHMENT COMPANIES BY ACTIVITY AND TURNOVER 2014 (£M) 83
  32. TABLE 31 25 LEADING ARCHITECTS IN THE COMMERCIAL OFFICE MARKET - PROFILES, FEE INCOMES, RECENT SCHEMES 88
  33. TABLE 32 PROFILES OF 20 LEADING DEVELOPERS IN THE COMMERCIAL OFFICE MARKET - PROFILES, RECENT SCHEMES 92

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