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A 29% upturn in planning approvals in January-March compared to the same period last year, provides positive news for the industry’s future work pipeline.

According to the latest Glenigan Construction Review, planning approvals for industrial, office, hotel & leisure and major health projects were particularly strong.

Chart showing an upturn in planning approvals

In all, detailed planning approval was given for new construction projects worth an average of £12,425 million in each of the first three months of this year. Major projects (worth over £100 million) fared particularly well in the first quarter; up 122% on the period last year and helped by some major one-off schemes.

Developers’ confidence remains intact

But given the mixed economic outlook and the rise in interest rates, approvals for underlying projects (worth under £100 million) held up relatively well. Detailed planning approvals for underlying projects averaged £6,245 million per month in the first quarter – down by only 3% on the previous three months and just 8% lower than the period a year ago - and suggesting that developers’ medium, and longer term, confidence in their markets has remained largely intact.

One promising sector seeing an upturn in planning approvals is smaller and medium-sized industrial buildings. Although businesses’ appetite for large, ‘big shed’ units has weakened, developers see good opportunities for smaller warehousing/logistics schemes, often in urban areas. Underlying industrial project approvals were worth £2,840 million in the first quarter, up 37% on the previous three months and 9% higher than a year ago. Most UK regions saw an upturn in industrial planning approvals, with Yorkshire & the Humber, the West Midlands and the South East among the busier areas.

The new work pipeline in the office sector also strengthened in the first quarter. Detailed planning approvals for offices were worth over £3.5 billion, more than double in the period a year ago. The numbers were boosted by approval for some major projects in London and the South East – notably the £350 million Link Park Heathrow Data Centre (pictured) (Project ID 20289877) and the £800 million Pinewood Studios Screen Hub in Bucks (Project ID 2036881).

CGI of the Link Park Heathrow Data Centre which received planning approvals in Q1 2023

But as with industrial work, the momentum on smaller and medium size office projects is picking up. Detailed planning approvals for underlying office projects, were worth £1.54 billion in the first quarter, up by two thirds on the period last year. The North West, West Midlands and Scotland all saw healthy rises in approvals for office projects.

Brighter times in hotel & leisure

Brighter times could also be on the horizon for contractors seeking work in the hotel & leisure sector. The Glenigan Construction Review notes that first quarter detailed planning approvals in the sector leapt by 85% to £1,933 million, up 11% on the period a year earlier. Major project approvals included the £210 million phase one of the Cultural Heart Programme in Huddersfield (Project ID: 06431582) and the £280 million phase one of the Atlantic Wharf Arena development in Cardiff (Project ID: 21427440).

Plans for smaller hotel & leisure schemes are also progressing from the drawing board; detailed approvals for underlying projects in the sector rose 30% in the first quarter to £1,243 million to stand 10% up on the period a year ago. The North West and South East were among the regions where planning approvals for hotel & leisure projects in the first quarter were well up on the period last year.

Meanwhile the pipeline for health-related construction projects also strengthened in the opening months of this year, particularly for larger projects. Detailed planning approvals for major health projects were worth £961 million in the first quarter, a four-fold increase both on the previous three months and on the period a year ago.

Key planning approvals in the first quarter included the £562 million Velindre Cancer Centre in Cardiff, (Project ID: 16228645) and The Oxford Science Park development (Project ID: 22351947) along with the £149 million phase four of the Great Ormond Street Hospital development (Project ID: 16262388).

Meanwhile, construction on other significant new health projects is also set to start this year. One is the £126 million new hospital emergency department at Derriford Hospital in Plymouth where detailed plans have been granted and a contract awarded under a framework with work pencilled in to start in November (Project ID: 21469693).

Glenigan customers can see details of all new approved projects in the regions and sectors covered by your subscription.
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