YOU only have to look to the sky to see the visible effects on the recession on the construction industry.
Skylines full of cranes have been replaced by empty shells of buildings and vacant offices. At a national level, and despite the positive GDP figures released last week, the recession has led to a peak-to-trough decline of 42% in commercial property construction output, which closely follows GDP.
Looking forward, this figure is predicted to drop again in 2012 to £27bn and is not expected to return to positive growth until 2014, when only a modest 0.3% rise is anticipated.
Here in the North West, the sector has experienced a staggering 44%t drop in output values between 2007 and 2011.
This is the steepest decline of all the UK regions surveyed except for Yorkshire & Humberside, and represents a £2.3bn reduction in activity.
At the same time, demand for new development is stalling, with retail rents falling by 17% and office rents falling by 20%t since 2007.
While Liverpool may have seen significant property investment in recent times, with projects such as Liverpool One creating distinct peaks in construction activity, our study suggests that we’re unlikely to see a return to such flagship projects anytime soon.
While a return to the pre-recession highs of 2007 may not be wholly realistic, what’s important now is that local developers approach new investment opportunities sensibly and with sustainable growth in mind.
For instance, there is still an appetite for the right kind of projects, with developments that combine office space with retail units and residential property in particular still going ahead.
In the near-term, high vacancy rates are set to become a huge issue for the commercial property sector and the construction industry as recovery remains elusive, threatening profits and presenting new risks associated with empty sites and buildings.
That’s why, for property owners, the importance of taking adequate security measures and making regular checks on the property to help mitigate the increased risks of burglary, arson and water damage, should not be underestimated.