Lack of new development could hinder economic recovery
In their annual Commercial Consturction Index, JLL and Glenigan have revealed that the economic recovery in the UK is well underway, but there is also expected to be an upcoming shortage of commercial property.
In the 12 months up to June 2014, £22.7 billion was spent on commercial projects in UK, which is a year on year increase of 6.6%. £10.8 billion is attributed to easier to complete refurbishments and the remaining £11.9 billion was spent on new builds.
The research revealed that London was by far the strongest sector and also states the belief that the capital is 12 to 18 months ahead of the rest of the country in terms of recovery. In fact, outside of London, many areas suffered a drop in the amount of development.
Retail was revealed to be the most positive sector for new project values at 19.3%, with offices up by 7.7% and industrial down 23.6%. Agents have been reporting a shortage of industrial and office, with further development needed.
As previously discussed on this blog, many areas are facing a shortage of the highest quality office space in the future. The research supports this, explaining there is currently an increased demand for high quality modern spaces, but not enough development to match the demand.
The research certainly showcases positive signs for the future, but also urges that new development be prioritised in the future. If there isn’t an increase in supply, then it seems it could have adverse effects on the economic recovery.
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