Featured Sector: Offices

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

Office construction took a huge hit following the credit crunch and subsequent slump in business conditions. Only now are project starts beginning to improve consistently, and from a very low base. Despite the continuing uncertainty surrounding the economy, we forecast the office market will grow over the next two years, as rising take-up and limited availability of Grade A office space encourages building in prime locations.

The office sector enjoyed a boom for most of the last decade, buoyed by confidence from the financial services industry and wider business community. Following the credit crunch, the underlying value of project starts fell by 68% between 2007 and 2011.

Since last summer, new building has been improving; the sector is being driven by overseas investors who continue to see Britain as a safe haven from troubled financial markets. Such investors are attracted to the long term returns offered by commercial property, especially large office developments in London.  This year, the value of planning approvals has been rising, as has the value of contracts being awarded. This means that we anticipate continued growth in the value of project starts through to 2014 despite weak economic growth at home and continuing crises in the Eurozone.