Bullish outlook cheers construction

6 May 2011

Bullish trading statements from contractors and a boom in London office construction is a creating a positive outlook for construction despite a challenging economic climate.

Galliford Try, Costain and Morgan Sindall all issued trading statements predicting strong progress for the rest of 2011, Construction Enquirer reported.

Galliford said 72% of the next financial year’s construction revenues were already secured while Costain confirmed a “robust” order book of £2.3bn and preferred bidder positions of over £400m.

Morgan Sindall has grown its order book by £200m since the start of the year thanks to recent contract wins on Crossrail and the Smarte East framework, Construction News reported.

Meanwhile the latest Drivers Jonas Deloitte crane survey revealed London office construction has shot up by 137% in the past six months, Building reported.

6.4m sq ft of space is under construction in the capital compared to 2.7m six months ago, as 25 new schemes have started on site.

And figures from the Royal Institute of Chartered Surveyors show that demand for office space is on the rise with 10% more surveyors reporting a rise in demand rather than a fall in the first quarter.

Anthony Duggan, head of research at Drivers Jonas Deloitte, said: “The race is on to deliver schemes to take advantage of the dwindling supply of Grade A space in 2012 and 2013.”

Matthew Elliott, head of transactions at Drivers Jonas Deloitte, added: “The big story, perhaps the only story, is the building of the new City towers. If all are built we could see over 200 tower floors coming to the market at a similar time in 2014/15 - an unprecedented situation - and this excludes The Shard being built on the other side of the Thames.

“Some will worry that this will lead to oversupply and falling rents, but others say that this is a further sign of confidence, a sign that London remains the global financial centre.”

The boom is in contrast to the commercial office market in many other UK cities, where there is often a glut of space.

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