Private commercial sector fuels growth in North East

Fred Slater
Fred Slater

Construction workloads dipped in the North East in the final quarter of 2014, but the private commercial sector saw the strongest growth, despite the shortage of bricklayers reaching a record high.

Forty two per cent more chartered surveyors in the North East reported that workloads in the construction sector had grown in the fourth quarter of 2014 and 58 per cent more respondents said that the private commercial sector was fuelling the greatest growth, followed by the private housing sector (43 per cent).

Around 60 per cent of chartered surveyors reported that material shortages, skill shortages and financial constraints were impeding further sector growth, while 52 per cent more respondents in the North East also reported a shortage of ‘other construction professionals’ (non-quantity surveyors or blue collar workers) – the second consecutive quarterly rise.

Despite these factors and anecdotal evidence that the upcoming election in May is creating industry uncertainty, confidence in the North East remains firm with 72 per cent more respondents expecting workloads to increase and 51 per cent anticipating profit over the next 12 months to increase.

Chartered surveyors in the region anticipate growth in workloads of 3.4 per cent in 2015 with jobs in the sector expected to rise by a further three per cent.

Elsewhere, the infrastructure sector continued to see what has been a much steadier pace of growth over the last 12 months and in Q4 2014, just 19 per cent more respondents reported a rise in workload activity in the North East.

Fred Slater, of Newcastle-based Arcus Consulting, said: “New projects and opportunities are on the increase but the fee levels that consultants - and perhaps contractors - are winning work at, is still very competitive and we continue to find new work difficult to come by, especially when in competition.

“The main challenge is certainly skills availability, now that numerous people have left the industry, given the depth of the recent recession. The result is, individuals requesting very high rates of pay which cannot necessarily be accommodated within the winning fee bid or from a contractor’s perspective, the tender sum.”

RICS director of the built environment, Alan Muse, added: “Labour shortages have become increasingly onerous in every area of the sector since the industry began to recover in mid-2013, with bricklayers and quantity surveyors in particularly short supply.

“Now that workloads are rising and optimism is growing, the practical challenges are in providing the skilled labour the industry needs and in alleviating the financial constraints, which saw nine months of decreased lending in 2014.

“The political challenges in the run-up to the election are around shoring up industry confidence to ensure the framework for effective planning and delivery of projects are in place to create long-term growth that is spread across the UK. This will also enable the investment that the industry needs to raise productivity and encourage new training initiatives.”