North East

North East – Overview

Project starts and detailed planning approvals advanced significantly against the previous year. However, main contract awards did not fare well, decreasing sharply on 2021 levels.

Totalling £1.04bn, work starting on-site in the North East decreased 64 per cent during Q4 2022 but remained 47 per cent higher than a year ago. Major projects (£100m or more) starting on-site, at £580m, decreased 72 per cent against the preceding quarter but stood 29 per cent up on the previous year. Underlying project-starts (less than £100m in value) performed strongly, increasing 29% against the preceding quarter on a seasonally adjusted (SA) basis as well as 78 per cent compared with a year ago.

Main contract awards in the North East added up to £625m, a 48 per cent decline compared with the preceding quarter to stand 82 per cent lower than a year ago. Major project contract awards suffered heavily, falling 69 per cent against the preceding quarter and 95 per cent compared with 2021 levels. Underlying contract awards were also very weak, with the value slipping back 56 (SA) per cent against the preceding quarter and 57 per cent compared with a year earlier.

More positively, detailed planning approvals performed well having increased 98 per cent during Q4 2022 and 47 per cent against the previous year to total £1.23bn. Major project approvals performed particularly well, increasing against the preceding quarter when no projects reached the planning approval stage and by 234 per cent compared with 2021 levels. While underlying approvals, at £760m, fell 28 per cent (SA) against the preceding quarter, the value increased 9 per cent against the previous year.

Sector Analysis – Project-Starts

The industrial sector dominated the region in terms of project-starts during Q4 2022, with the value rising 32 per cent against the previous year to total £618m. The sector accounted for over half (59 per cent) of the total value of project-starts, being boosted by the start of a £130m subsea cable manufacturing facility in Blyth (Project ID: 18433689). Social Housing was the third-most active sector, accounting for 8 per cent of the total value. Social Housing experienced six-digit growth against 2021 levels, largely due to a 265-unit development in Sunderland (Project ID: 21294783).

Private housing accounted for the second-highest proportion of work starting on-site (20 per cent), with the value of work having increased by 412 per cent compared with a year ago to total £205m. Strong growth was due to the commencement of several schemes. In contrast, utilities (-79 per cent) and offices (-76 per cent) experienced particularly poor periods compared with a year ago to total £21m and £4m respectively.

Value of project-starts in the North East during Q4 2022 by sector

Sector Analysis – Detailed Planning Approvals

Like project-starts, industrial was the most active sector in the region for detailed planning approvals, accounting for more than one-third (35 per cent) of the total value.. The value of project-approvals increased 819 per cent against 2021 levels to total £426m, being boosted by the consent of a £200m manufacturing plant in Middlesbrough (Project ID: 22138567). Health was the second-most active sector in the region, accounting for almost a fifth (19 per cent) of the total value. As with industrial, health also experienced triple-digit (+162 per cent) growth against the previous year to total £228m. Health approvals included a new £128m hospital building at the Royal Victoria Infirmary in Newcastle-Upon-Tyne (Project ID: 22085583).

Utilities experienced four-digit growth (+1902 per cent) growth compared with a year earlier to total £214m. Utilities consents included a £78m carbon capture and research development facility in Peterlee (Project ID: 22237248). Elsewhere, private housing approvals did not fare as well, with the value falling decreasing 45 per cent on 2021 levels to total £190m.  Offices (-92 per cent), education (-89 per cent) and hotel & leisure (-70 per cent) suffered particularly sharp falls compared with the previous year.

Value of project approvals in the North East during Q4 2022 by sector

Forecast Construction-Starts for the North East

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in October 2022 p – provisional, f – forecast.
Source: Glenigan