Featured Sector: Industrial

Underlying value of construction projects starting on site. (Excludes individual projects of more than £100 million and framework agreements).

The last year has seen a strengthening in the value of industrial projects starting on site, despite UK manufacturers facing weak demand from the Eurozone in particular.

While the manufacturing volumes are recovering slowly, output is almost 10% below the peak level seen at the beginning of 2008, suggesting that in the near term most firms have sufficient capacity to accommodate any likely increase in the demand. 

However there has been increased demand for logistic space from distributors and online retailers, especially for large logistics warehouses over the last three years. This together with the gradual strengthening in manufacturing output, has trimmed the supply of vacant industrial floorspace and lifted rental and capital values on industrial premises. This in turn supported a 32% rise in the value of industrial project starts last year.

Glenigan data shows that the number of industrial projects being planned eased off last year; planning approvals barely increased during the year as a whole. This is expected to temper the flow of projects starting on site this year, before growth resumes in 2014.