The latest Deloitte Regional Crane Survey charts the impact on client confidence of Brexit uncertainty in Birmingham, Manchester and Leeds.
But researchers remain hopeful that last year’s fall from peak 2018 starts could still prove a blip as developer confidence returns.
Office starts fell sharply although residential schemes continued to prop up city building activity, with Leeds breaking Crane survey records for the city and Manchester holding up high levels of residential work.
Simon Bedford, partner and regional head at Deloitte Real Estate, said: “Regional cities continue to show huge resilience in the face of recent economic uncertainties in delivering record volumes of city centre living, offices and education.
“It’s been a record year for residential with the three English cities delivering more homes than at any time since 2007 and our development pipeline suggests this trend will continue,” he added.
“However, fewer homes have been delivered than we’ve previously anticipated driven by a lack of skilled labour, increasing costs, scarcity of development land, and developers being at capacity.
“This could present real challenges for future delivery.”
In Birmingham, ongoing high levels of office construction continue to bouy construction activity, but just 11 new schemes started last year, half the previous level in the last two years.
Of the new starts, seven sites were large scale residential schemes and four were offices. There were no new retail, leisure or hotel schemes started last year.
Edwin Bray Partner, Deloitte Real Estate said: “Only time will determine whether 2019 was just a blip in development activity or something more permanent however we can confidently say that the developers were not deterred and throughout the year they carried on building.”
The construction of HS2 Curzon Street would be a bellwether for resurgent growth in the years ahead as Birmingham also prepares to stage the Commonwealth Games.
Construction activity in Leeds is down with 12 new starts against 21 in 2018, with office development down by two thirds.
But the residential sector is breaking crane survey records with 2,832 units under construction and 2,218 of these homes for the ‘build to rent’ market.
An additional 2,799 student accommodation rooms are also being built, the highest in the Leeds crane survey history.
The city has also broken crane survey records for new education and research facilities with 420,000 sq ft completing in 2019, and over 480,000 sq ft remaining under construction.
This North West city’s skyline is taking shape with 27 schemes completing in 2019 and a further 47 schemes are due to complete in 2020.
But the level of project starts last year slipped to 23 from 44 in 2018.
Manchester’s office sector remained most resilient across the cities with two million sq ft under construction for a second year.
A total of 3,619 homes were delivered to market this survey while an additional 12,357 units remain under construction.
The survey expects nearly 9,000 of these homes to be delivered in 2020, the highest on record since the Manchester crane survey began in 1999.
Bedford said: “The crane surveys are showing changing patterns in the retail and leisure sectors.
“Developers have moved away from big schemes favouring smaller projects – primarily linked to residential blocks – such as units for food, beverage and convenience retail.
Looking ahead, Bedford added: “Developer sentiment remains high but we’re seeing real challenges arising in the need for infrastructure investment to keep up with the pace of real estate.”