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Commercial Office Construction Market Report – UK 2017-2021 Analysis

Published: 03/08/2017 / Number of Pages: 85 / Price: £795.00

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Introduction and Overview

The 5th edition of the 'Commercial Office Construction Market Report - UK 2017-2021 Analysis' focuses on construction activity within the UK Commercial Office Market against a backdrop of continued economic uncertainty surrounding Brexit.

Key issues covered in the report include:

  • Analysis of construction output in the commercial office sector with forecasts to 2020-21.
  • Structure and size of the UK Commercial Office sector in London and key regional cities including: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Southampton and Northern Powerhouse cities - Leeds, Liverpool, Manchester, Newcastle.
  • Analysis of key drivers of office activity; take-up, availability / supply, prime office rents.
  • Detailed review of major construction and fit-out contractors and architects involved in commercial office sector construction - overview of contractor capability and contract experience.
  • Key developers and investors - overview of commercial office portfolios and development pipelines.
  • Future prospects and opportunities for commercial office sector work for the construction supply chain. 

Areas of particular interest include:

  • Analysis of the likely impact of Brexit on the commercial office market, particularly in London. Impact of large banks / financial institutions potentially relocating to other EU countries.
  • A review of key issues affecting the commercial office market including: Planning Issues; the London Plan; PDRs; impact of Business Rates Revaluation; the impact of Transport Infrastructure schemes; environmental considerations; office construction costs; and modern methods of construction.
  • Review of the office development pipeline for London and the regions, details the key commercial office schemes currently under construction and those in planning.
  • In-depth analysis of the London Office Market, focusing on activity in the City, the West End, Docklands/East and key emerging office markets such as Kings Cross, Southbank, etc. Analysis of office development in Enterprise Zones and in the Tall Buildings Market. Key schemes in development.
  • Professional services and TMT sectors continue to dominate. Declining reliance on the banking and financial services sectors.
  • 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:

Abstract Securities, ADP, AHH Construction, AHR,Allies & Morrison, Argent, Arup, Aukett Swanke, Balfour Beatty, BAM, Barlow Interiors, Barnwood Interiors, BDP, Beck Interiors, Bowmer & Kirkland, 8Build, Bridgford Interiors, British Land, Broadway, Brookfield Properties, Buro Happold, BW Interiors, Byrne Group, Canary Wharf Contractors, Clark Contracts, Collins Construction, Como Interiors, Derwent London, 3D Reid, Eric Parry, Eric Wright Group, Faulkner Browns, Feilden Clegg Bradley, Foggo Associates, Frogmore, Galliford Try, Glenn Howells, Graham Interiors, Great Portland Estates, Grimshaw, Grosvenor, Havelock Europa, Heron International, Hines, HKR, HLM Architects, HOK, Hurst Group, Interserve, ISG, John Sisk, Kier, Kohn Pedersen Fox, Laing O'Rourke, Land Securities, Lend Lease, MACE, M&G Real Estate, MAKE Architects, Malyan, Maris Interiors, McLaren Construction, McLaughlin & Harvey, MEPC, Midas Construction, MITIE Interiors, Modus Group, Morgan Lovell, Morgan Sindall, Morris & Spottiswood, Multiplex, NG Bailey, Norr Architects, Overbury, Paragon Interiors, Parkeray, Patton Fit-out, Peel, PLP Architecture, Portview, Railston, RG Carter, Robertson Construction, Royal Institute of British Architects (RIBA), Russells Construction, Scott Brownrigg, Seddon Group, Sharkey, Sheppard Robson, Simons Construction, SimpsonHaugh & Partners, Simpson (York), Skanska, SOM, Speller Metcalfe, Stanhope, St. Modwen, Stride Treglown, Structuretone, Styles & Wood, Swanke Hayden Connell, U&I, Urban & Civic, Vinci, Wates Interiors, Willmott Dixon, Woods Bagot,


Construction Market for Commercial Offices in the UK

  • Total Construction New Work Output with forecasts to 2021.
  • Non-Residential Construction Output by Sector in 2016 and Outlook between 2017 and 2021.
  • Construction Output in the Offices Sector and Forecasts for Output to 2021.
  • Commercial Offices - New Development Pipeline for Central London and the Regions.
  • London Office Market -Emerging Areas of Development.
  • Office Refurbishment/Fit out Market.

Construction Market Supply in the Commercial Office Sector

  • Key Construction & Fit-out Contractors in the Commercial Office Sector - overview of capability and contract experience.
  • Key Architects in the Commercial Office Sector - overview of capability and contract experience.
  • Commercial Office Developers and Investors.

The Commercial Office Market in the UK

  • Performance of the Commercial Office Sector in 2016.
  • Key drivers of office activity - Take-up, Office Occupiers by End Use Sector, Supply/Availability, Key Office Rents.
  • Regional Office Markets: Activity in Key UK Cities - Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Southampton.
  • London Office Market - City/West End/Docklands and East. Key emerging areas of development.
  • Commercial Offices - Tall Buildings Market in the UK.
  • Enterprise Zones - Commercial Office Development in the UK.
  • Outlook for the Commercial Office Market.

Factors Affecting the Commercial Office Market

  • Planning Issues - Localism, National Planning Policy, Local Enterprise Partnerships and Enterprise Zones.
  • Planning Issues in London - The London Plan and Office Development, Mayoral Infrastructure Levy.
  • Impact of Permitted Development Rights on Office Market - Conversion of Offices to other uses.
  • Sustainability and Green Offices - Carbon Emissions from Office Buildings, Key Environmental Legislation affecting Office Design, BREEAM Offices.
  • Modern Methods of Construction (MMC) in the Commercial Office Market.
  • Commercial Offices - Construction Costs.
  • Impact of Transport Projects - Key Transport/Infrastructure projects in London & the Regions.
  • Economic & Political Drivers - Impact of Brexit on the Commercial Office Market; Business Rates Revaluation 2017.

Report Summary

In 2016, contractors' output in commercial office new build market is thought to have increased by 17% compared with 2015. During 2016, the UK commercial office market experienced considerable fluctuations linked to political uncertainty and decreased consumer and investor confidence surrounding Brexit. However, despite this, the market experienced strong levels of leasing activity in key regional office markets and sustained rental growth due to the limited availability of Grade-A space in cities like Birmingham, Bristol, Leeds, Manchester, London, Cardiff, Edinburgh, and Glasgow.

A key driver of office output growth is the level of speculative office building which began to experience growth in 2013 and continues to be driven by strong rental growth, low vacancy rates and an increase in pre-letting activity in 2016. However, this surge in speculative development is likely to see a slowdown after 2017 and the stalling or cancellation of some projects, particularly in the capital, as demand is re-assessed in the light of economic uncertainty making speculative development less attractive to developers.

A key issue which is likely to challenge the rental market in London will be the impact of business rates revaluation on the market in 2017, meaning that rates on prime space in the Central London commercial office market are set to experience significant above-inflation increases. The introduction of Permitted Development Rights has resulted in a significant level of proposals for conversion of secondary office buildings to residential use, and this has removed a considerable proportion of secondary office stock from the commercial office market leading to further constrained supply in many areas.

Forecast growth for commercial office construction is slower over the forecast period, with output levels expected to decline between 2017 and 2019 as business and consumer confidence are affected by economic uncertainty surrounding Brexit, before recovering again. The medium-term outlook for the offices sector is heavily reliant on the continued importance of London as a commercial and financial centre. However, increasing development in other UK cities is forecast to increase, with the Government a key client stimulating increased activity across the regions during 2017.


List of Contents

Contents Listing

  1. 1. INTRODUCTION 7
  2. 1.1 BACKGROUND 7
  3. 1.2 SOURCES OF INFORMATION 7
  4. 2. SUMMARY AND FUTURE PROSPECTS 9
  5. 2.1 SUMMARY 9
  6. 2.2 MARKET PROSPECTS 11
  7. 3. ECONOMIC ENVIRONMENT 13
  8. 3.1 GDP 13
  9. 3.2 INFLATION & INTEREST RATES 15
  10. 3.3 UNEMPLOYMENT 16
  11. 3.4 HOUSEHOLD CONSUMPTION 17
  12. 3.5 HOUSING & CONSTRUCTION 17
  13. 3.6 STERLING 18
  14. 3.7 POPULATION PROFILE 19
  15. 3.8 CONCLUSIONS 19
  16. 4. COMMERCIAL OFFICE CONSTRUCTION MARKET 21
  17. 4.1 TOTAL CONSTRUCTION OUTPUT 21
  18. 4.2 CONSTRUCTION OUTPUT IN THE COMMERCIAL OFFICES SECTOR 25
  19. 4.2.1 New Work 25
  20. 4.2.2 Office Refurbishment/Fit out Market 26
  21. 4.3 MARKET INFLUENCES 27
  22. 4.3.1 Office Development Pipeline 27
  23. 4.3.2 Planning Issues 35
  24. 4.3.3 Sustainability and 'Green' Offices 38
  25. 4.3.4 Modern Methods of Construction (MMC) in the Commercial Office Market 41
  26. 4.3.5 Construction Costs 42
  27. 4.3.6 Impact of Transport Projects on the Commercial Office Market 43
  28. 4.3.7 Economic and Political Drivers 46
  29. 4.3.8 Tall Buildings 47
  30. 4.3.9 Local Enterprise Partnerships & Enterprise Zones 51
  31. 5. THE COMMERCIAL OFFICE MARKET IN THE UK 54
  32. 5.1 PERFORMANCE OF THE COMMERCIAL OFFICE SECTOR 54
  33. 5.1.1 Take-up 54
  34. 5.1.2 Office Occupiers by End-use Sector 55
  35. 5.1.3 Supply 56
  36. 5.1.4 Rental Growth 57
  37. 5.2 LONDON OFFICE MARKET 59
  38. 5.2.1 City 60
  39. 5.2.2 West End 61
  40. 5.2.3 Docklands 63
  41. 5.3 REGIONAL OFFICE MARKETS 65
  42. 5.3.1 Birmingham 66
  43. 5.3.2 Bristol 67
  44. 5.3.3 Cardiff 68
  45. 5.3.4 Edinburgh 68
  46. 5.3.5 Glasgow 68
  47. 5.3.6 Leeds 69
  48. 5.3.7 Liverpool 69
  49. 5.3.8 Manchester 70
  50. 5.3.9 Newcastle 70
  51. 5.3.10 Southampton 71
  52. 6. CONSTRUCTION MARKET SUPPLY - OFFICE SECTOR 72
  53. 6.1 OVERVIEW 72
  54. 6.2 LEADING CONSTRUCTION CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR 72
  55. 6.3 FIT-OUT CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR 76
  56. 6.4 LEADING ARCHITECTURAL PRACTICES IN THE COMMERCIAL OFFICE SECTOR 80
  57. 6.5 LEADING DEVELOPERS IN THE COMMERCIAL OFFICE SECTOR 83

Tables & Charts

  1. CHART 1: CONTRACTORS' OUTPUT IN THE OFFICES SECTOR 2012-2021 BY VALUE (£M) 9
  2. TABLE 2: GDP DATA - 2013-2017 - KEY CONSTITUENT ELEMENTS 14
  3. CHART 3: INTEREST RATES AND INFLATION (CPI) FROM 2000-2021 16
  4. CHART 4: PDI & SAVINGS RATIO AT CURRENT PRICES 2000-2021 17
  5. TABLE 5: EXCHANGE RATE FLUCTUATIONS 2012-2019 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 19
  6. CHART 6: VALUE OF TOTAL CONSTRUCTION OUTPUT 2012-2021 BY VALUE (£BN AT CURRENT PRICES) 21
  7. CHART 7: VALUE OF NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2016 22
  8. TABLE 8: CONTRACTOR'S OUTPUT IN THE OFFICES SECTOR (PUBLIC & PRIVATE) 2012-2021 (£M) 25
  9. CHART 9: LONDON OFFICE DEVELOPMENT PIPELINE: TOTAL DEVELOPMENT SPACE ANTICIPATED 2017-2021 (SQ. FT. M) 28
  10. CHART 10: LONDON OFFICE DEVELOPMENT PIPELINE: CITY, WEST END AND DOCKLANDS: 2017-2020 (SQ. FT. M) 29
  11. TABLE 11: LONDON OFFICE MARKET: KEY SCHEMES IN DEVELOPMENT - SIZE, MAIN DEVELOPER, COMPLETION DATE 31
  12. CHART 12: REGIONAL OFFICE DEVELOPMENT PIPELINE: TOTAL/SPECULATIVE DEVELOPMENT SPACE ANTICIPATED 2017-2020 (SQ. FT. M) BY CITY/REGION 32
  13. TABLE 13: LONDON OFFICE MARKET: KEY SCHEMES IN DEVELOPMENT - SIZE, MAIN DEVELOPER, COMPLETION DATE 34
  14. TABLE 14: LONDON PLAN - DEMAND FOR OFFICE-BASED EMPLOYMENT AND FLOOR-SPACE 2011-2031 36
  15. TABLE 15: CROSSRAIL LEVY - INDICATIVE CONTRIBUTIONS BY END USE SECTOR AND BY CONTRIBUTION AREA (£) 37
  16. TABLE 16: BREAKDOWN OF NON-DOMESTIC BUILDINGS' EMISSIONS BY SECTOR 38
  17. TABLE 17: COMMERCIAL OFFICE CONSTRUCTION COSTS - 2016 (£/SQ. M. GIA) 43
  18. TABLE 18: TOP HIGH-RISE OFFICE SCHEMES IN THE UK PIPELINE 49
  19. TABLE 19: ENTERPRISE ZONES - KEY COMMERCIAL OFFICE DEVELOPMENTS 52
  20. CHART 20: UK OFFICE MARKET - TOTAL TAKE-UP LEVELS: 2007-2016 (SQ. FT. M) 55
  21. TABLE 21: UK OFFICE MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 56
  22. CHART 22: UK OFFICE MARKET - AVAILABILITY: 2007-2016 (SQ. FT. M) 57
  23. TABLE 23: UK OFFICE RENTS 2015-2020 IN KEY REGIONAL CITIES (£/SQ. FT.) 58
  24. CHART 24: CITY OFFICE MARKET - TOTAL TAKE-UP LEVELS: 2007-2017 (SQ. FT. M) 60
  25. TABLE 25: CITY OFFICE MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 60
  26. TABLE 26: CITY OFFICE PRIME RENTS: 2007-2016 (£/SQ. FT.) 61
  27. CHART 27: WEST END OFFICE MARKET - TOTAL TAKE-UP LEVELS: 2007-2016 (SQ. FT. M) 62
  28. TABLE 28: WEST END MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 62
  29. TABLE 29: WEST END PRIME RENTS: 2007-2016 (£/SQ. FT.) 63
  30. CHART 30: DOCKLANDS OFFICE MARKET - TOTAL TAKE-UP LEVELS: 2007-2016 (SQ. FT. M) 64
  31. TABLE 31: DOCKLANDS MARKET: TAKE-UP BY END USE SECTOR 2016 (%) 64
  32. TABLE 32: DOCKLANDS PRIME RENTS: 2007-2016 (£/SQ. FT.) 65
  33. CHART 33: REGIONAL OFFICE MARKET - TAKE-UP LEVELS ('000 SQ. FT) BY CITY 2016 66
  34. TABLE 34: TOP CONTRACTORS IN THE COMMERCIAL OFFICE SECTOR: KEY PROJECTS IN 2016/17 AND PREVIOUS EXPERIENCE 73
  35. TABLE 35: TOP SPECIALIST FIT-OUT/INTERIOR REFURBISHMENT COMPANIES BY ACTIVITY AND TURNOVER 2016-17 (£M) 78

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