Offices

Offices

Offices – Overview

While project starts and main contract awards fell against 2022 levels, detailed planning approvals increased on the previous year and preceding three months, to provide a boost to the development pipeline.

Office work starting on-site totalled £1,920 million during the three months to March, a 26% increase compared with the preceding quarter, but 32% down on the previous year. The quarterly growth was thanks to major projects (£100 million or more) doubling against the last three months of 2022 to total £830 million, which on the other hand is a 17% decline on the previous year. Underlying project-starts (less than £100 million in value) decreased 32% against the preceding three months on a seasonally adjusted (SA) basis to stand 40% down on a year ago, bringing them down to a total of £1,090 million.

Totalling £1,541 million, office main contract awards decreased 37% against the previous quarter to stand 28% down on the previous year. At £802 million, major project contract awards experienced a mixed period with the value decreasing by 17% against the previous quarter but climbing 1% compared with a year ago. Underlying contract awards declined 39% against the preceding quarter (SA) and by 45% against the previous year to total £739 million

Office detailed planning approvals, totalling £3,533 million, jumped 69% on the preceding three months and more than doubled compared with last year. Underlying approvals, at £1,540 million, rose 35% on the preceding three months (SA) to stand 67% up on a year ago. Major project approvals experienced an even greater growth, jumping three times against the preceding three months and more than doubling compared with a year ago, bringing them up to a total of £1,993 million.

Size of Office Projects

All value bands experienced a weak period for project-starts during the three months to March. The ‘£50 million to £100 million’ value band had the least steep decline, with project-starts only falling 2% against the previous year to total £363 million. The ‘£20 million to £50 million’ value band fell 42% against the preceding year to total £339 million.

The ‘Over £100 million’ value band totalled £830 million during the period, experiencing a 17% decline against the preceding year’s levels. The ‘£10 million to £20 million’ value band also decreased against last year’s levels (-64%), with project-starts totalling £113 million during the first quarter of 2023, while the ‘£5 million to £10 million’ value band halved with a total of £125 million. Finally, project-starts in the ‘Up to £5 million’ value band fell 47% against the previous year to total £150 million.

Regional Analysis – Project-Starts

London was the most active area of the UK for office project-starts, accounting for 55% of the total value during the first quarter of 2023, despite the value decreasing 14% compared with the previous year’s levels. Office work starting in the Capital totalled £1,059 million. Further decline was prevented by the commencement of the EDGE London Bridge project worth £450 million (Project ID: 19015864). The South East faced the steepest fall of 87%, totalling £106 million, which accounts for 6% of project-starts in the office sector.

In contrast, the North West performed better, being the second most active region for the sector, with a share of 15% and a total of £281 million as a result of a 13% increase against the previous year. Project-starts in the region included the £100 million phase 3 of the Talbot Gateway development in Blackpool (Project ID: 20404651). Totalling £195 million, project-starts in the North East quadrupled compared to last year’s levels, which was predominantly thanks to the commencement of the £180 million Pilgrim Street North Block in Newcastle (Project ID: 21555073). The value of projects commencing on-site in the East Midlands grew substantially in comparison with last year’s figures, having jumped more than 25 times to total £66 million, however it held a small share of 3% nationwide.

Office Project-Starts during the three months to March 2023

Regional Analysis – Detailed Planning Approvals

In line with the overall trend, most regions experienced a growth in office detailed planning approvals. London had the biggest share (40%) of planning approvals in the sector, with a total value of £1,400 million, which almost tripled compared to last year’s figures. Projects in the Capital included the £350 million Link Part Heathrow Data Centre (Project ID: 20289877). In second place was the South East, which increased more than nine times against a year ago and accounted for 26% of the sector to total £916 million. The growth was almost exclusively due to the approval of the £800 million Pinewood Studios Screen Hub development in Iver (Project ID: 20368819).

Third in terms of share of approvals (9%), the North West doubled in value compared with 2022 to total £301 million. The West Midlands also experienced a quintuple growth in value, which brought its value up to £292 million, an 8% share of the sector. However, this growth was almost exclusively driven by the Typhoo Wharf redevelopment approval in Birmingham worth £200 million (Project ID: 02345442). Scotland also performed quite well. The value of detailed planning approvals there jumped almost six times compared with a year ago, totalling £180 million.

Office Detailed Planning Approvals during the three months to March 2023

Forecast Construction-Starts for Offices

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in April 2023 p – provisional, f – forecast.
Source: Glenigan