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Industrial buildings have been a star performer for the construction industry, with the value of project starts almost trebling between 2009 and 2015. After a turbulent twelve months, the sector is poised to benefit from renewed investment activity over the next two years.

Last year, the sector was hit hard by Brexit uncertainty, with the value of underlying industrial project starts falling by 26%. This decline in project starts is currently feeding through to workloads, with industrial sector output during the three months February 2017 12% down on a year ago.

However, the development pipeline remains strong and sector activity is forecast to improve over the next two years. After the initial disruption following the referendum vote there are now signs that investor confidence has improved. A recent rise in project starts since the start of the year suggests that investors are now pressing on with some of the delayed projects.

The construction of new warehousing and distribution premises has been the fastest growing area within the industrial sector in recent years. Structural change in the retail sector, with the increasing importance of on-line retailing, click & collect and home deliveries, is fuelling long term growth in the demand for warehousing and distribution premises.

Whilst retail sales growth may slow over the coming year, this may actually accentuate the demand for such accommodation as price conscious consumers increasing shop on-line in an effort to seek out better value. With online purchases forecast to take an ever-larger share of retail sales, this trend is expected to drive further expansion in the warehousing & logistics area over the next two years.

Value of underlying project starts

Industrial starts by category

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