UK construction activity December 2023: Industrial

Project-starts and main contract awards experienced declines against the previous quarter and last year. More positively, growth in detailed planning approvals on both the preceding three months and 2022 provides a boost to the development pipeline.

Industrial overview

During the three months to December, industrial project-starts fell 5 per cent against the preceding three months to stand 58 per cent down on a year ago, totalling £1.09bn. Major projects (£100m or more) totalled £350m during the period, up on the previous quarter when no projects started on-site but 70 per cent down on last year’s levels. Underlying industrial work starting on-site (less than £100m in value) decreased 20 per cent against the previous quarter on a seasonally adjusted (SA) basis to stand 48 per cent lower than a year ago, totalling £742m.

Totalling £681m, industrial main contract awards decreased 42 per cent against the preceding three months and stood 70 per cent down against last year. Underlying industrial main contract awards decreased 44 per cent (SA) against the preceding three months and remained 60 per cent lower than a year ago. No major projects reached the contract awarded stage, unchanged on the preceding three months but down on the previous year.

Industrial detailed planning approvals totalled £3.40bn, having grown 22 per cent on the previous three months to stand 2 per cent up on last year. Major project approvals grew 37 per cent on the previous quarter but slipped back 35 per cent against the preceding year to total £820m. Underlying projects totalled £2.58bn, a 10 per cent increase (SA) on the preceding three months, and 25 per cent higher than the previous year.

Types of projects started

Warehousing & logistics work starting on-site added up to £422m, a 27 per cent fall compared with the previous year. Despite the decline, manufacturing accounted for 39 per cent of industrial starts during the three months to December, making it the most active segment.

Manufacturing starts decreased 85 per cent against the previous year to total £277m, accounting for 25 per cent of the sector. In contrast, other industrial projects more than tripled against the previous year, which brought the total up to £392m, a 36 per cent share of the whole sector.

Regional

Most regions experienced a slump in industrial starts against 2022 levels. The South West was one of the regions that bucked the trend. Having quadrupled on a year ago, the region accounted for 37 per cent of industrial work starting on-site during the three months to December, with the value adding up to £400m. This growth was solely due to the £350m 10 Dock Refurbishment project in Plymouth.

Yorkshire & the Humber increased 46 per cent on a year ago to total £212m, a 19 per cent share of industrial project-starts.

Accounting for 11 per cent, the East of England was the only other region to experience growth during the period, having jumped 85 per cent against last year to total £125m. In contrast, accounting for 7 per cent of starts the West Midlands slipped back 63 per cent to total £76m. Accounting for the same share, Scotland and the North West fell 28 per cent and 66 per cent to total £74m and £73m respectively.

Yorkshire & the Humber was the most active region, accounting for a 15 per cent share of all consents, having nearly tripled on last year, bringing its total value up to £514m. Accounting for the same share, the North West totalled £501m, having doubled on a year ago. The East of England accounted for 14 per cent of industrial approvals, totalling £471m, a 39 per cent increase on a year ago.

The East Midlands also experienced strong growth at 62 per cent, accounting for 13 per cent of approvals with a total of £442m. At £356m, the West Midlands accounted for 15 per cent of approvals having almost quadrupled against 2022 levels. Also accounting for a tenth of all consents, the South West more than doubled to total £352m. The growth was boosted by the £223.03m Panattoni Honda Site Swindon Unit 5 development.