Glenigan makes its 2011 forecasts
Starts on office developments are expected grow by 41% in 2011 compared with 2010 as developers respond to increasing demand from tenants plus rising capital and rental values, particularly in central London — according to the latest Glenigan Index. Economics director Allan Wilen comments, ‘Little new floorspace came onto the market in the recession, and the shortage of quality office space will worsen as the recovery gathers momentum.’
Retail construction is expected to increase by 4% year on year following a very strong 2010. Glenigan expects the major supermarkets to continue to expand throughout 2011, with retailers and landlords expected to increasingly refurbish existing premises in an attempt to increase footfall and consumer spending.
Prospects for other sectors are downbeat, with the hotel and leisure sector expected to see a 24% year-on-year decline in new projects starts as the 2010 Olympics-related boom seen in 2010 fades, with most games-related projects now underway.
Overall projects starts are expected to fall by 7% this year compared to 2010, following a 6% increase in the value of construction starts from 2009 to 2010 that was primarily fuelled by the private sector.
Looking ahead, the growth start areas are expected to be private housing, industrial, office, retail and civil-engineering projects. Declines are expected in social housing, hotel and leisure, education, health and community, and amenity projects. Alan Wilen comments, ‘The impact of planned Government investment cuts is clear, with only rail avoiding the axe and increasing private-sector confidence not quite strong enough to counter Government cuts.’