The latest Deloitte Regional Crane Surveys show that residential and purpose-built student housing developments led construction activity across four of the UK’s most important regional cities in 2023 with over 29,000 city centre homes under construction or completed.
The latest Crane Survey series monitors construction activity in the central areas of Manchester, Leeds, Belfast and Birmingham.
“Development activity remained strong in 2023 with the four cities collectively recording 63 new construction starts across a range of sectors including offices, residential, hotels, retail, education, and student housing. In total, 151 schemes are currently under construction …” said the report.
“Across the four cities in 2023, there was 3.4 million sq. ft. of office floorspace under construction — on a par with the last few years, and Manchester reported the largest share of space under construction with 2.2 million sq. ft.
“The highest volume of floorspace delivered to market of the four cities was Leeds — hitting an all-time high with nearly 700,000 sq. ft. of office floorspace across three schemes.”
The report said construction activity in Leeds city centre remained resilient throughout 2023 with 16 new starts – two above the survey’s annual average.
The development of student accommodation hit record-breaking highs for the second year running in Leeds, with 3,704 bed spaces under construction across 10 schemes.
The wider residential sector in Leeds remained strong with 15 schemes under construction, almost half of which started on site in 2023, set to deliver 3,714 homes to market in due course.
The development market in Manchester and Salford continued to deliver strong results in 2023, with 61 projects on site.
“Manchester’s housing delivery has been remarkable over the past six years with a total of 22,000 homes delivered to market,” said the report.
“Last year a total of 2,402 new homes across 10 schemes completed, and a further 11,764 are under construction. An additional 245,652 sq. ft. of new hospitality and leisure space was also brought to market.
“A solid office market is complimented by a strong pipeline set to deliver 2.2 million sq. ft. of office floorspace by 2025.
“There was a notable increase in highly sustainable and amenity-rich offices, and of the floorspace under construction, refurbished office space made up 53% – marking the first time that refurbishments have overtaken new construction.”
John Cooper, partner in real assets advisory at Deloitte, said: “Construction is one of the barometers for economic health and the industry has continued to show resilience despite macroeconomic challenges and higher borrowing rates.
“Residential development is currently leading the way with 87 residential schemes recorded as under construction, 28 of which broke ground in 2023.
“Whilst Manchester has been a trailblazer for city centre residential development in recent years, all regional cities are now following this trend.
“Belfast City Centre, for example, has seen a ten-fold increase in activity with over 950 homes now under construction in the city centre, a real step forward. Birmingham also had a very strong year recording a 36% increase in city centre residential under construction …
“However, it is the cumulative delivery across all sectors over the last six years that tells a remarkable story of the renaissance in regional city centres.
“The four cities we monitor have seen the collective delivery of over 55,000 residential and student homes, over 6,700 hotels rooms, circa 11 million sq. ft. of office space, and over four million sq. ft. of educational facilities.
“This is genuinely transformative.
“Developers and investors, working in partnership with local authorities and city planners, are creating great places to live and work.
“New neighbourhoods have emerged and continue to take shape.
“Whilst there is still much to do, the last few years have paved the way for quality place-based regeneration and positive change across our regional cities. Looking ahead, there is a healthy development pipeline to match demand too.”
Jennifer Chatfield, senior planner in the real estate team at Deloitte, added: “The diversification of city centres is key to driving footfall and, in turn, creating thriving and sustainable places that people want to visit and live in.
“Students and retained graduates play a crucial role in this.
“UCAS estimates that there could be up to a million higher education applicants in a single year in 2030, up from almost three quarters of a million today. It is encouraging to see that developers are responding to the demand in the cities where students choose to work, rest and play.
“In total we recorded 8,193 purpose-built student accommodation bedspaces under construction – a 40% increase from our last survey.
“The growth was particularly evident in Birmingham, with a 15-fold increase in student bed spaces under construction from around 100 in 2022, to over 1,500 in 2023.
“Similarly in Manchester, three new student residential schemes started last year, representing 2,153 bed spaces – the highest number in this survey’s 24-year history.
“The challenge for other cities will be to deliver affordable student products, as well as the provision of amenities and social infrastructure to not only attract but retain the talent in its region …
“Looking forward, we predict some softening in construction activity as costs move through the supply chain, but this will not trigger a significant drop off in activity.
“Demand for new forms of living, working and leisure will continue to drive activity over the medium-term in the central areas of these four regional cities.”