Manchester Construction Trends: Mixed Outlook for 2024
Manchester construction trends show a mix of positive and negative developments, reflecting a period of uncertainty in 2024. Despite challenges that have faced the city’s construction sector, Manchester continues to outperform other regional cities in the UK. However, a significant slowdown in the number of new projects breaking ground has raised questions about the future direction of construction in the city. According to Deloitte’s annual crane survey, just 20 new projects commenced construction last year, marking the lowest total in over a decade.
This article explores Manchester’s construction industry, highlighting factors behind the decline in new starts. It also examines residential resilience and office market shifts. We also examine the potential future challenges the city’s construction sector could face in the coming years.
A Decline in Construction Starts
The construction market in Manchester has been under pressure in recent years, and this trend continued into 2024. Deloitte’s annual crane survey revealed that just 20 projects began construction in the city in 2024, the lowest figure seen in the past decade. This represents a slight decrease compared to the 21 starts in the previous year. Although the difference between 2023 and 2024 is minimal, the total number of new projects commenced is significantly below the 10-year average.
Despite this slowdown, Manchester has still managed to remain ahead of other regional cities in the UK. The survey shows that cities like Belfast, Leeds, and Birmingham also saw declines in new starts. Belfast dropped nine projects, Leeds lost five, and Birmingham saw a reduction of two. This suggests that, although Manchester’s construction sector is facing a decline, it is still performing better than many of its peers.
Resilience in Residential Development
The residential sector in Manchester has shown signs of resilience despite broader challenges facing the construction market. In 2024, Manchester saw 11 new residential projects start construction. A total of 4,400 new homes were delivered, increasing by 2,000 units from the previous year. The total number of residential homes under construction has decreased by 1,000 units over the past two years. However, overall delivery remains strong.
The number of homes currently under construction in Manchester stands at 10,788, which reflects the continued demand for residential properties in the city. Despite this, some challenges in the residential market may arise in the coming years. The delivery of taller residential buildings, in particular, has been delayed due to new regulations brought about by the Building Safety Act. These regulations have forced developers to reassess high-rise residential projects. As a result, the completion of new buildings may decline.
However, there is still optimism in the residential sector. Plans for new housing projects continue to emerge. A major development includes Manchester Metropolitan University’s proposal for 2,200 student units at its All Saints Campus. This suggests that while some projects face delays, the residential sector remains a key area of growth for Manchester’s construction industry.
The Growing Need for Housing in Manchester
The need for housing in Manchester continues to grow, and the city remains committed to addressing this demand. John Cooper, infrastructure and real estate partner at Deloitte, says Manchester is on track to exceed home demand. The city will surpass the average annual demand for new homes in Greater Manchester. The city is projected to complete around 9,000 new homes over the next two years, which will help meet the growing demand for housing.
In addition to the ongoing residential development, there are also efforts to address the increasing need for affordable housing in the city. The private sector continues to focus on luxury developments. However, there is a clear emphasis on delivering affordable homes for a diverse population.
Office Space Market Faces Uncertainty
The office space market in Manchester has faced significant uncertainty over the past year. In 2024, the total amount of office space under construction fell from 2.2 million square feet to 1.5 million square feet, a decline of 30%. Please shorten the below sentence by splitting it into two shorter sentences. Each sentence to be up to 20 words long. Use active voice and transition words.
A key factor in this downturn is the shift towards hybrid working, which has altered the demand for office space. Many businesses are adopting flexible working arrangements, and remote work is becoming more common. As a result, the need for large, traditional office spaces has decreased. This has created a more uncertain market, with many developers opting to focus on refurbishing existing office buildings rather than constructing new ones.
Refurbishment projects now play a significant role in Manchester’s office space market. Notable examples include AM Alpha’s 300,000 square feet Rylands revamp and Parthena Reys’ 350,000 square feet One Hardman Boulevard project. These refurbishments reflect a broader trend towards high-quality office spaces. Businesses increasingly demand spaces that prioritise collaboration and sustainability.
Rental Growth in the Office Market: Manchester Construction Trends
Despite the slowdown in new office space developments, the demand for high-quality office space in Manchester remains strong. The shortage of grade A office space has driven rents upwards, with rental prices for office space approaching £50 per square foot. This growth in office rents is expected to continue, given the limited supply of new office space coming onto the market.
As the demand for office space in Manchester continues to outstrip supply, particularly for high-quality, flexible, and sustainable spaces, rental growth is likely to remain strong. The shift to refurbished office spaces now accounts for 68% of the total office space under construction. This reflects growing demand for modern office environments that meet businesses’ needs.
The Shift Towards Sustainability and Collaboration
A key trend in the Manchester office space market is the growing emphasis on sustainability and collaboration. As businesses adjust to hybrid working patterns and seek to improve their environmental credentials, there is an increasing demand for office spaces that prioritise these factors. The focus is now on creating workspaces that are not only energy-efficient but also foster collaboration and flexibility.
The growing demand for sustainable office spaces reflects a broader shift in workplace culture. As employees value flexible working and environmentally-conscious practices, businesses are seeking office spaces that align with these values. Consequently, demand for such spaces is rising. This has created an opportunity for developers to deliver high-quality, sustainable office spaces that meet the changing needs of the modern workforce.
Future Outlook for Manchester’s Construction Sector
Looking ahead, Manchester’s construction sector is likely to face a mixed outlook. The residential market remains resilient, especially in new home deliveries. However, economic and regulatory pressures still affect the overall construction landscape. The slowdown in new office developments and the challenges posed by the Building Safety Act are likely to continue impacting the market in the short to medium term.
However, there are still reasons to be optimistic about the future of construction in Manchester. The city remains one of the top-performing regional cities in the UK, and the ongoing transformation of its skyline reflects the strength of its construction sector. As the city continues to evolve into a dynamic innovation hub, there is potential for further growth and development in the years to come.
Manchester prioritises housing needs and embraces sustainable office spaces. Meanwhile, regenerating key areas keeps construction vital to the city’s economy. Challenges lie ahead, but the city’s construction sector is well-positioned to navigate them. It will continue driving growth.
Conclusion: Manchester Construction Trends
In summary, Manchester’s construction market is experiencing a period of mixed results in 2024. While the number of new construction projects has declined, the residential sector remains resilient, and there is strong demand for both new and refurbished office spaces. Despite challenges like hybrid working and regulatory pressures, Manchester’s construction industry outperforms many regional cities. The city is well-positioned for future growth.
As the construction market adapts to new trends, such as sustainability and flexible working, Manchester is likely to remain a key player in the UK’s construction sector. Manchester continues to transform while addressing housing needs. Its commitment to high-quality office spaces strengthens its path to future success.