In 1999, the construction industry was building more factories and warehouses than it was building schools and leisure centres.
The private industrial sector that year was worth nearly £8bn to the construction industry, but fast forward to the end of 2015, and it only just broke through the £4bn barrier.
So-called ‘super-sheds’ have been tipped as one of the up-and-coming sectors for the construction industry as retailers continue their drive towards a distribution and online shopping-based model.
But how much is the market really worth to contractors? And can the industry put that demand in numbers?
The most important thing that contractors need to know is that there is less than a year’s supply of modern distribution units over 100,000 sq ft across the UK.
‘Super-sheds’ are in demand, and there is not enough supply to satisfy it – that’s where contractors can step in.
As of the end of February this year, there was 11.5m sq ft of speculative development under construction, not nearly enough to meet that demand.
Some of the UK’s biggest retail clients – Ikea, Lidl, and B&M to name but three – are looking for space. Ikea alone has a requirement for a 1m sq ft site in the south of England.
Retailers are driving nearly half of the demand for large warehousing developments, while design and build contracts make up just over half over the new space taken up last year.
But there’s still more room for the market to grow, especially for speculative development – clients are showing few signs of cooling their interest, and market conditions mean that they are snapping up speculative schemes, especially when design and build contracts can be much more expensive to procure.
And before it’s suggested that big-box units might be simpler to build and have a lower construction value, some of the largest deals to date have been eight-figure sums, like McLaren’s £100m distribution centre for Uniserve.
Lastly, let’s not forget that the market, at £4bn last year, is only just over half of what it was at its peak. That’s an extra £3.7bn of work that could be coming to the market.
For everything you need to know about the industrial sector – where the demand is, what’s being built, and who’s looking for space – look out for our feature on Construction News website tomorrow morning.
Also in the news
The UK’s rail regulator has raised concerns over the amount of money for the network beyond 2019, leaving Network Rail with “tough choices” to make over which projects it will carry out. Jack Simpson has the full story.
SME contractors have said that a potential Brexit could cut red tape for construction and would allow government to ’better legislate’ for the industry.
And it’s not good reading for trade unions, with statistics released today suggesting that membership in construction has fallen to another record low.