Spec Finish

Industrial With housing and infrastructure often stealing the headlines, the £5 billion industrial construction sector often seems to fall below the radar, but with the retail and commercial sector changing, it is one of the fastest growing parts of the sector, with close to double digit growth anticipated in the next two years. THE INDUSTRIAL SECTOR LEADING THE CHARGE 18 www.thefis.org I n this feature we look at what is driving the market, the impact of the shift to e-commerce, which fuels datacentres, warehouses and distribution centres, the impact of the Government’s ‘super- deduction’ tax relief, Brexit, and concerns over the resilience of global supply on the UK manufacturing investment. On top of all this is the increasing demand for sustainable buildings, whatever their function. We talk to leading experts about how technology and innovation are driving change in the sector. Warehouses The Construction Products Association (CPA) published its ‘Construction Industry Forecast 2022 – 2023’ report towards the end of January this year. Professor Noble Francis, Economics Director at the CPA, says that its research shows that industrial activity is mainly focused on warehouses and factories construction but the days of these being ‘just big sheds’ are long gone. They are now high value, high-tech facilities and the outlook is bright, with volume forecast to increase by 13% in 2022 and 9% in 2023. Illustrating the innovation currently in the sector, Segro and Berkeley Group plan to deliver the UK’s first urban six- storey industrial development in North West London. What is most notable about the strength of the industrial pipeline, however, is that the projects are spread across the whole of the UK, providing opportunities for firms in every region. Professor Francis goes on to say: “Warehouses output is forecast to grow by 23% in 2022 and 9% in 2023. There is currently strong demand for industrial and logistics space due to a long-term shift of shopping away from instore retail towards e-commerce, which accelerated during lockdowns. “Whilst the lockdowns were temporary, even when we return to the ‘new normal’, shopping will not revert to pre-pandemic patterns. Furthermore, warehouses demand has been boosted by global supply chain disruptions caused by the pandemic and Brexit, which forced firms to keep larger inventories. Also, the Chancellor announced eight UK freeports during Budget 2021 – their success may boost warehousing and logistics requirements, an upside risk to our forecast.” The CPA report suggests that factories outlook also remains positive (even though manufacturers continue to face global supply chain challenges) and output is forecast to increase by 20% in 2022 and 10% in 2023. The current strength of UK manufacturing and high demand that is struggling to be met across the UK and global economies means that domestic firms have revived previously-paused plans and are also keen on new investments. These will be supported by the Government’s ‘super-deduction’ tax relief for plant and machinery, which currently runs until 31 March 2023. www.constructionproducts.org.uk e-commerce drives demand Edward Finch, Managing Director at Troax UK Ltd, supports the CPA findings, he said: “In 2020, following the Government’s instruction for all non-essential stores to close, consumer behaviour rapidly changed. Online retail sales increased to 30.9% of all retail sales in the UK – significant increase from 21.8% in 2019. “This increase in e-commerce activity has driven huge demand and advancements in automated warehousing solutions. Online retail, as a percentage of total retail sales, has settled around 28.3% in 2021 and is forecast to remain at that level for the next five years. This is driving retailers to accelerate their growth strategies, whilst innovating new technologies and processes to increase speed of operations and services. With unemployment at a record low, labour is scarce and companies are looking for automated robotic solutions as an alternative. “We have seen a significant increase in the demand for safety solutions such as machine guarding, as well as office space and partitioning for industrial and commercial buildings. This has come from all major sectors of retail, particularly food, clothing and electrical. We have also seen a significant increase in demand for data hall security, EV battery manufacturing and cleanroom applications for pharmaceuticals.” www.troax.com/gb/en-gb