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Manchester leads offices and residential boom

The residential sector is fuelling strong growth in the development pipelines of major UK cities, according to Deloitte’s latest crane survey.

Manchester is set to see 5,203 new residential units come to market this year, exceeding the city’s previous high of 4,196 in 2006.

The survey suggests Manchester’s boom could be maintained in the medium term, with a total of 27,000 units having secured planning approval in the city.

Birmingham meanwhile is forecast to see 2,777 units completed this year – more than four times the city’s 10-year average, according to Deloitte.

Residential is also driving activity in Leeds, with 619 new units in the pipeline for 2018 alongside a significant proportion of refurbishment projects, which Deloitte said showed “returning confidence” in resi across the city.

Cast consultancy director Joe Thornton welcomed the findings, but said more still needed to be done in the residential market.

He said: “The resilience of the industry should not lead to complacency on the industry’s part.

“As a sector, we must continue to look at innovative and efficient ways to deliver new homes throughout the country, taking a long-term perspective on the delivery method that seeks to plug the skills gaps and improve build quality.”

Belfast bucked the residential trend, its development pipeline instead being led by hotel and office developments, with 15 new starts planned for 2018.

This was partly attributed to the city’s Belfast Agenda, which aims to boost investment by £5bn and create 15,000 new jobs in the city by 2021.

Office development in Birmingham is also running at a high level, with more than 1.4m sq ft of space under development.

Deloitte said demand in the city will be maintained as more financial and professional services, such as HSBC and HMRC, move operations to the city.

Birmingham’s longer-term outlook is also positive, according to the report, due to the planned arrival of HS2 and the publicity the city will receive from hosting the 2022 Commonwealth Games.

Manchester’s office development pipeline maintained its recent high volumes with 1.5m sq ft of floorspace under development, driven by a lack of Grade A premises, Deloitte said.

Deloitte Real Estate assistant director Simon Bedford said: “New office construction is regarded as a key barometer for the economy, the real estate industry, and ultimately Manchester’s benchmark in its mission to achieve status as a global city.”

Moda and Caddick Group MD Johnny Caddick suggested the survey’s findings reflected the benefits of devolution.

He said: “Today’s crane survey is a demonstration that the government’s ‘devolution revolution’ is paying dividends, with core cities such as Manchester, Birmingham, Leeds and Belfast seeing high levels of development across the board, but particularly in residential.

“In order to remain competitive, the regions will have to avoid the same housing pressures that London faces while also offering the same job opportunities, which as today’s figures show, they are more than capable of doing.”

One area of slow development across the cities was retail, with just five new starts in 2018 recorded in total across the four cities analysed.

Deloitte noted that some residential developments will include commercial space, but suggested much of this would be for food and leisure rather than retail.

It pointed to a general shift away from large retail developments due to “the rise of online retail and the priority of the ‘shopping experience’ requiring smaller units and conversion to leisure use”.

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